China's Baidu rebounds in Q2 with 83% jump in net income

Total revenues in the second quarter is $3.08 billion

Chinese internet giant Baidu said today that its net income had soared 83% in the second quarter — a strong recovery from tumbling profits in 2016 thanks to drastic spending cuts.

Though Baidu's profit had fallen by two-thirds in 2016 and dropped even further in the first quarter of 2017, "China's Google" pulled itself together in quarter two, attaining a net income of 4.4 billion yuan ($652 million) in the period from April to June — an 82.9% increase year-on-year, the company's unaudited financial results stated.

The figure far exceeds analysts' estimates of 2.9 billion yuan, and is a sign of Baidu's recovery after authorities cracked down on its online advertising business, the company's primary revenue stream.

Total revenues in the second quarter were 20.9 billion yuan ($3.08 billion), a 14.3% increase from the same period in 2016. Mobile revenue represented 72% of total revenues, up from 62% the same period last year.

"We will execute on two strategic pillars: to strengthen our mobile foundation and lead in AI," Baidu's billionaire founder and chief executive Robin Li said in a statement.

Major new initiatives include developing cloud storage capabilities and partnering with car manufacturers like Ford and computing giant Microsoft to create self-driving cars.

Baidu's search engine dominates the Chinese internet, but now the company is seeking to focus on artificial intelligence, investing heavily in the sector.

It has drastically reduced its expenses and operating costs, particularly in unprofitable arenas such as its food delivery services, in order to diversify and distance itself from a scandal that weighed heavily on its books last year.

In the spring of 2016, Baidu was the target of a social media firestorm after the death of a cancer-striken student whose family used its search engine to find a supposed treatment that proved ineffective.

The incident highlighted the extent to which paid advertisements played a role in Baidu's search results, and the government afterwards promised stricter regulations of online ads.

The move was a blow to the company's revenue, especially as other tech giants such as Alibaba, with its online sales and electronic payments platforms, and Tencent, with its ubiquitous social media app WeChat, competed for larger market shares.