Baidu.com Shares Surge After Profit, Forecast Beat Estimates
By John Liu and Dina Bass
July 24 (Bloomberg) -- Baidu.com Inc., operator of China's most-used Internet search engine, surged 13 percent in extended U.S. trading after second-quarter profit and sales forecast beat analysts' estimates.
The company's American depositary receipts gained $38.38 to $327.08 at the end of after-hours trading. Baidu said yesterday second-quarter profit rose 87 percent from a year earlier to 265 million yuan ($38.8 million), beating the 233.5 million yuan median of seven analysts' estimates in a Bloomberg survey.
Chief Executive Officer Robin Li added to Baidu's lead over Google Inc. in China by introducing services such as online games from Shanda Interactive Entertainment Ltd. and anti-virus software from Kingsoft Corp. Baidu has almost two-thirds of China's search market, the world's largest by users.
``They did good in the second quarter,'' said Elinor Leung, an analyst with CLSA Ltd. in Hong Kong who recommends investors buy the stock. ``They did a good job of getting more large corporate customers to advertise with them, in addition to more small and medium sized businesses.''
Net income increased to 7.62 yuan per ADR from 4.09 yuan a year earlier, Baidu said. Sales doubled to 802.6 million yuan, beating the 793.3 million yuan median of seven analysts' estimates.
The company's ADRs fell 1.3 percent, or $3.66, to $288.70 in Nasdaq Stock Market trading before the earnings release.
Third-Quarter Forecast
For the third-quarter, Baidu forecast sales of as much as 935 million yuan. That compares with the 907 million yuan median of 12 analysts' estimates compiled by Bloomberg.
Baidu's share of the Chinese Internet search market rose to 64.4 percent in the second quarter from 58 percent a year earlier, according to research firm Analysys International. Google's share rose to 26.1 percent from 23 percent while Yahoo! Inc.'s fell to 5.5 percent from 11.6 percent, the Beijing-based researcher said.
Beijing-based Baidu had more than 181,000 advertising customers in the quarter, a 12 percent increase from the previous three months. Average revenue per customer increased 22 percent to 4,400 yuan from the first quarter.
Total operating costs rose 93 percent to 526.3 million yuan.
Sales of online advertising linked to search results in China may surge more than sixfold to 22.3 billion yuan in 2011 from 3.7 billion yuan last year, according to estimates by Credit Suisse Group AG. Total online ad sales in China may quadruple to 45 billion yuan in 2011 from 10.4 billion yuan, the bank said.
China passed the U.S. in February to become the world's biggest Internet market with 221 million users, the state-run Xinhua News Agency reported. The nation may have 406 million Web users by 2010, more than the total population of the U.S., Credit Suisse estimates.
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