Chinese search giant Baidu has missed revenue forecasts for the third quarter, and has offered a more cautious outlook for the final three months.
In a press release Monday, the company posted a 60 percent rise in net profit to US$478.6 million for the three months ended September. This was on the back of a 49.7 percent rise to US$994.6 million--missing Wall Street forecasts of US$1 billion.
The third quarter revenue growth was Baidu's slowest in two years, amid new competition posed by anti-virus software firm Qihoo 360 which launched its own service in August 2012, noted Reuters Monday.
Qihoo's search engine has started to gain traction, accounting for 5 to 10 percent of local search traffic since its launch, according to data from research firm Analysys International. Baidu is estimated to control about 65 to 70 percent of the market.
"In the last two years, Baidu was so comfortable because Google backed out of China," said T.H. Capital analyst Tian Hou in an article by Investor's Business Daily, referring to Google's exit after it refused to comply with local censorship regulations in 2010.
Tian added: "They didn't have to do anything, they just had to collect money. But now they're in a situation where they have competition."
For the fourth quarter, Baidu expects revenue of US$979.3 million to $1.01 billion, below analysts estimates of US$1.03 billion according to Thomson Reuters.
"Mobile and cloud represent our vision for the future of China's Internet, and Baidu will continue to proactively drive the development of this crucial ecosystem. We stand ready to meet the challenges and capture the opportunities the PC-to-mobile transition presents," said Robin Li, CEO of Baidu, in the statement.