The stock price of Baidu Inc (ADR) (NASDAQ:BIDU) tumbled after reporting earnings that fall short of the expectations of Wall Street analysts.

The American Depository Shares (ADS) of the Chinese internet search provider closed $197.68 a piece, down by 4.16% on Monday. BIDU shares declined further by 7.305 to $183.24 a piece during the extended trading around 6:30 P.M. in New York.

Baidu financial results

Baidu reported earnings of $590.6 million or $1.81 per ADS for the second quarter. Its total revenues were $2.67 billion, an increase of 38.3% from the same period a year earlier.

Wall Street analysts expected Baidu to deliver $1.88 in earnings per share on $3.03 billion for the second quarter.

According to Baidu, its online marketing revenue for the period was $2.61 billion. It has 590,000 active online marketing customers by the end of the quarter. Its traffic acquisition cost was $340.6 million, bandwidth costs were $340.6 million and content costs were $235.5 million.

Baidu said its selling, general and administrative expenses were $627.4 million. Its research and development expenses increased 56.2% to $437.5 million. The company said its effective income tax rate rose from 15.4% to 19% during the quarter.

Baidu is well positioned to capture opportunity in O2O e-commerce

In a statement Baidu Chairman and CEO Robin Li said the company is “ideally positioned to capture the O2O e-commerce opportunity and build the Next Baidu.

According to Li, the company’s search business is delivering solid growth and enjoying an ample runway ahead. It has also powerful mobile gateways to leverage.

On the other hand, Baidu CFO Jennifer Li said, “We delivered solid financial results in the second quarter of 2015 with our core search business exhibiting strong growth and attractive profitability. With the solid base of our core search business, coupled with upward momentum of our O2O e-commerce initiatives, we continue to invest decisively in the ‘Next Baidu’. We are delighted by the progress we have achieved and are confident that these investments will generate long term shareholder value.”

Business outlook

Baidu expected to achieve total revenues in the range of $2.93 billion to $2.99 billion for the third quarter, an increase of around 34.4% to 37.4%.

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