BEIJING Baidu’s (BIDU, Financial) recent c-suite changes, announced Tuesday, could potentially spur short-term gains for its advertising business, but the strength of its financial leadership is in doubt, according to a report from Bernstein Societe Generale Group. The reshuffle follows a period of volatility, with Baidu’s shares dipping almost 10% in the past week.
Julius Rong Luo, Baidu’s chief financial officer (CFO), is taking over the reins as the executive vice president overseeing the company’s Mobile Ecosystem Group (MEG). In return, the head of MEG, Jackson He, will now take up the role of interim CFO. Analysts at Bernstein, though, feel that MEG has had its rough times in terms of monetization and that Luo’s cost-cutting prowess will prove critical in managing Baidu’s finances.
However, his lack of experience as a CFO raises eyebrows over his ability to enforce fiscal discipline, particularly in balancing tensions between AI and ad revenue growth. Bernstein analysts underscored the need for a more seasoned financial leader, suggesting that He’s interim status could culminate into a permanent CFO appointment.
Bernstein maintains its Market-Perform rating on Baidu, with a price target of $97, which is roughly 7% behind its current price.
This article first appeared on GuruFocus.