By Cate Cadell

By Cate Cadell


BEIJING (Reuters) - Chinese search engine giant Baidu Inc offered a disappointing revenue outlook for the rest of the year, blaming lost advertising sales during this month's Communist Party Congress and sending its shares sliding more than 10 percent.


Baidu, which is seeking to get back on a firmer footing after a series of setbacks, said companies had reined in marketing to show respect as Beijing held the sensitive gathering where it reaffirmed the position of President Xi Jinping.


It predicted fourth-quarter revenue growth of 22 percent to 29 percent from a year earlier, below an average analyst forecast of 36 percent from Thomson Reuters I/B/E/S. For the third-quarter, it logged 29 percent growth in revenue to 23.49 billion yuan ($3.5 billion), in line with expectations.


The sale of its loss-making food delivery unit to a company backed by rival Alibaba Group Holding Ltd, will also mean loss of revenue, said Baidu's Chief Financial Officer Herman Yu.

Baidu's U.S.-listed shares plummeted more than 10 percent to $234 in extended trading, even though the company posted a 69 percent jump in operating income to 4.7 billion yuan ($707 million) in the quarter just ended.

Net income more than doubled to 7.9 billion yuan, helped by the sale of its food-delivery business.

Baidu's content and advertising businesses have already been hurt by Beijing's recent drive to regulate and censor online content, a strategic priority under president Xi.

That comes on top of a major setback last year when the death of a student with cancer was tied to healthcare advertising he had found on Baidu's platforms. The case spurred public anger and led to strict new regulations.

In a further sign that its progress in recovery has been quite slow, Baidu said its ad business had 486,000 active online marketing customers in the third-quarter, a 3 percent gain from the previous quarter but still down 7 percent from a year earlier.

During last year's shake up, Baidu also launched a news feed product which it says surpassed $1 billion in cumulative revenue this quarter, amid tough competition from Weibo Corp, Tencent Holdings Ltd and popular start-up Toutiao.

Baidu Chief Executive Robin Li, speaking on a call with analysts on Friday, added the company has created China's "largest database to combat fake news", cooperating with 600 organizations to identify problem content.

The search firm was hit with steep penalties in September for failing to remove fake news, including content deemed offensive to the Communist Party.

(Reporting by Cate Cadell in Beijing; Additional reporting by Munsif Vengattil in Bengaluru; Editing by Edwina Gibbs)