The largest online search engine of China, Baidu Inc (NASDAQ:BIDU) gets inferior from rivals and that is the reason the company has decided to considerably spend on marketing throughout 2013.
Company reported sluggish profits due to intensified rivalry from Qihoo 360 which could be fatal in the near future.
On Friday Company criticized the growing costs in traffic acquisition that led a sluggish quarterly profit since September 2008. During the current quarter the traffic acquisition costs were nearly 10 % of total sales up from 7.8 % in prior year. The search engine anticipates that the ratio will surge until the end of 2013. Acquisition costs are royalties that a search engine pays to partner software apps and websites to show its results.
Investors were disappointed with the company’s quarterly results with net income of 328.9 million US dollars, an 8.5 % year over year growth or 95 cents for the quarter below the estimated 1.03 US dollars a share.