Baidu Inc (ADR) (NASDAQ:BIDU) reported its fiscal fourth quarter and full year 2013 results on Wednesday. The Chinese Internet giant earned $1.39 per share with $1.57 billion in revenues for the quarter ending December 31. Analysts polled by Thomson Reuters expected Baidu to report $1.37 in EPS and $1.53 billion in revenues. For the full year, revenues jumped 43.2% to $5.3 billion, while net profit inched up a meager 0.6% to $1.7 billion.

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Baidu unlikely to show profit growth this year

Though Baidu Inc (ADR) (NASDAQ:BIDU)’s Q4 profit beat the Wall Street consensus, the figure actually declined about 0.9% YoY (excluding currency fluctuations). The company earned 2.78 billion yuan in the latest quarter, compared to 2.8 billion yuan in the same quarter last year. And Baidu doesn’t expect its profits to grow this year. That’s because the company is spending heavily to boost its presence on China’s surging smartphone market.

Baidu Inc (ADR) (NASDAQ:BIDU) issued strong first quarter revenue guidance of $1.53-$1.57 billion, well above the Wall Street estimates. But the Beijing-headquartered company warned that its heavy spending on mobile would hinder earnings growth despite growing revenues. Baidu is promoting its mobile services to keep up with users who increasingly access the web on smartphones. The Chinese search engine company’s marketing and administrative costs soared 135%, clearly reflecting the increasing spending on the promotion of its mobile services.

Baidu gets aggressive on mobile

Baidu Inc (ADR) (NASDAQ:BIDU) Chief Financial Officer Jennifer Li said during the conference call that the company will increase spending on marketing, content, infrastructure and traffic acquisition. She said the company plans to invest in services that help mobile users buy things based on their location. Users are increasingly making consumption decisions on the go. They open an app to reserve a seat when approaching a movie theater or restaurant. Baidu is also planning to release new products like organizational and security apps for smartphones.

China has more than 618 million Internet users. As they have started spending more time on their mobile devices, analysts have been worried about the ability of Internet companies to generate revenues from the mobile market. Smartphone users have showed different behavioral patterns than traditional PC users. But Baidu Inc (ADR) (NASDAQ:BIDU) CEO Robin Li said the company now generates more than 20% of its revenue from smartphone users.

Baidu Inc (ADR) (NASDAQ:BIDU) has acquired smartphone app store 91 Wireless Websoft Ltd. for $1.9 billion and group buying company Nuomi as part of its strategy to become an integral part of the smartphone users’ lives.

Baidu Inc (ADR) (NASDAQ:BIDU) shares surged 2.55% to $177.31 in pre-market trading Thursday.