Baidu earnings jump 87pc on new customers
Baidu.com, the mainland's largest internet search engine, yesterday said second-quarter earnings jumped 87 per cent from a year earlier as it shrugged off the economic slowdown and signed up new enterprise customers.
Revenue doubled to 802.6 million yuan (HK$917.97 million) while net profit rose to 265 million yuan from 141.9 million yuan. Basic earnings per share were 7.74 yuan, up from 4.19 yuan a year earlier.
Baidu's management forecast total revenue this quarter would range from 905 million yuan to 935 million yuan, representing an 82 per cent to 88 per cent increase from the same period last year and a 13 per cent to 16 per cent growth from the second quarter.
'The outlook reflects our anticipation of temporarily altered user behaviour during the Beijing Olympics,' the company said. 'We believe the event will have a long-term beneficial effect on the internet industry as more people will use the internet as a tool to find information.'
Baidu chief executive Robin Li said he saw some economic slowdown and closure of small and medium-scale enterprises in southern China. But strong growth in demand for the company's services would outweigh any slowdown.
Baidu had 181,000 active online marketing customers during the second quarter, an increase of 12.4 per cent from the previous three months.
'Small and medium-sized firms will turn to Baidu for low-cost effective marketing during tough economic conditions,' said JP Morgan internet analyst Dick Wei, adding that the economic slowdown would not hurt Baidu significantly.
Baidu reported gross margins (excluding share-based options ) of 65.1 per cent, up from 63.5 per cent a year earlier, while operating margins rose to 38.1 per cent from 34.4 per cent.
Goldman Sachs said Baidu's better-than-expected performance was due to lower costs.
Baidu booked 101.7 million yuan worth of traffic acquisition costs, representing 12.7 per cent of total revenue. The figure was below Goldman Sachs' estimation of 112.2 million yuan.
Traffic acquisition costs involve Baidu sharing revenue with other websites in order to attract customers.
The traffic acquisition costs reflected the continued growth of revenue contributions from Baidu Union members, where several internet websites have joined Baidu to increase the traffic to its portal. Baidu now has more than 5000 websites as Union members.
To strengthen its leading market position, Baidu is building a customised platform integrating industry information, market trends and business and industry news reports.
Robust growth
Baidu says strong demand will offset impact of slowdown
From the previous quarter, the company's active online marketing customers reached 181,000, up
12.4%
