How Has Restructuring Affected Baidu?
Baidu reshuffles show increased focus on non-ad revenue
Baidu’s (BIDU) administration and business structures have changed considerably since the company hired former Microsoft (MSFT) executive Lu Qi, appointing him as COO (chief operating officer) and head of its autonomous car unit.
Though the changes have affected various aspects of Baidu’s operations, the main theme that emerges is that they’re focused on growing the company’s non-advertising revenue.
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On the administration front, Qi’s joining Baidu has displaced Baidu’s former vice chair, Wang Jing, who was also the head of the company’s autonomous driving division.
Intelligent Driving Group
Among the business structure changes that have taken place at Baidu has been the creation of a new division called the Intelligent Driving Group (or IDG).
The division handles Baidu’s programs related to autonomous driving, and it’s headed up by Qi. Success in this segment should help Baidu to drive top and bottom line improvements without relying on Internet advertising budgets.
Baidu posted revenue of ~$2.6 billion and EPS (earnings per share) of ~$0.93 in 4Q16. The chart above shows Baidu’s quarterly EPS trend.
Is Baidu preparing to take on Amazon?
The restructuring at Baidu has also seen the company expand the team that works on its voice assistant, Dumi, also known as Baidu Secretary. Baidu’s expansion of the Dumi team offers a hint that it could leverage its artificial intelligence to take on Amazon (AMZN) and Alphabet’s (GOOGL) Google in the home automation system space. Amazon has a home automation hub called Echo, powered by its voice assistant, Alexa.
Google has a similar product to Echo that it calls Google Home, powered by Google Assistant. Apple (AAPL) is also rumored to be eyeing the home automation hub market with a device like Echo.
Baidu’s interest in home automation systems has been betrayed by its recent acquisition of Raven Tech, a maker of smart home equipment utilizing artificial intelligence.