Baidu grows on Google's mainland woes
As Google's mainland business falters, internet search giant Baidu is accelerating its online search and e-commerce activities after posting more than a twofold increase in net profit during the third quarter.
Baidu yesterday reported a 112.4 per cent increase in net income to 1.047 billion yuan (HK$1.22 billion) in the three months to September, up from 492.862 million yuan a year earlier, as its customer base and online advertising business continued to expand. Total revenue climbed 76.4 per cent to 2.256 billion yuan from 1.279 billion yuan.
In a report, Deutsche Bank analysts in Hong Kong described Baidu's latest quarterly results as 'solid' and its 3.01 yuan in earnings per share as 9 per cent above the market's consensus estimate of 2.75 yuan.
'We believe Baidu's market share gain is largely due to the relative underperformance of Google China,' the analysts said. 'We expect this trend to continue in the fourth quarter, as disputes between Google China and its domestic agents will likely distract Google management's focus.'
According to data from research firm Analysys International, Baidu's share of the country's internet search market reached 73 per cent last quarter from 70 per cent in the second quarter.
Google, which had a highly publicised quarrel with mainland authorities over censorship and cyber security issues early this year, saw its market share slip further to 21.6 per cent from 24.2 per cent in the second quarter.
Google vice-president John Liu, who heads the company's Greater China operations, said last week that the world's leading internet search services provider remains committed to growing its mainland business, noting online marketing opportunities with the country's more than 40 million small and medium-sized enterprises (SMEs).
Baidu chairman and chief executive Robin Li Yanhong said his company is 'successfully enhancing its position as a key enabler of China's internet industry'.
'Both large companies and SMEs are becoming more sophisticated online marketers, and spending more with us,' Li said.
Nasdaq-listed Baidu's active online marketing customers in the third quarter rose 25.9 per cent to 272,000 users. Average monthly revenue per customer was up 40.7 per cent to 8,300 yuan.
Online marketing turnover grew 76.5 per cent to 2.26 billion yuan, up from 1.28 billion yuan, helped by the greater adoption of Baidu's Phoenix Nest paid-search service.
Baidu, which aims to compete more against mainland internet peers Alibaba Group and Tencent Holdings, is boosting its e-commerce efforts through a joint venture with Japanese online retail firm Rakuten and adding embedded applications on its online search service, including games, e-books, photo-editing programs and anti-virus software.
According to Baidu, its fourth-quarter revenue is estimated to range from 2.37 billion yuan to 2.44 billion yuan.
Earnings surge
Baidu is stepping up its online search and e-commerce activities
Baidu posted a net profit of 1.05 billion yuan for the quarter to September, a year-on-year increase of: 112%
