Oppenheimer: Baidu's Quarterly Results To Show Continued Margin Squeeze

Baidu Inc's BIDU profit margin is likely to show a continued squeeze from operating costs when the company posts earnings later Wednesday.

Oppenheimer's Ella Ji expects that even as the company continues to post sharp gains in revenue, its current investment binge won't yield results until next year when its spending declines and margins widen.

The company plan to make 2014 "a year of investment" is aimed at gaining market share in mobile search. It's also developing payment services as well as data analysis to boost "click-through rates," Ji said in a research note.

The Beijing-based company has the lion's share of China's search market, and Morgan Stanley's Philip Wan expects the upcoming earnings report will show its mobile-based searches exceeding those from personal computers for the first time.

Analysts on average expect Baidu to post profit growth of 12 percent for the recent quarter, to $9.71 per share, on revenue of 84 percent to $13.6 billion.

Baidu closed down 1.9 percent to $224.55 per share.