Baidu's profits double as market share expands
Baidu, the leading Chinese-language internet search services provider, will step up spending on network infrastructure, sales and research and development this year after its net earnings more than doubled in the first quarter.
The Beijing-based company yesterday reported a 122.8 per cent jump in first-quarter net profit to 1.07 billion yuan (HK$1.28 billion), from 480.54 million yuan a year earlier, because of strong advertising income and continued gains in mainland market share.
Turnover grew 88.3 per cent to 2.44 billion yuan from 1.29 billion yuan.
The number of active online marketing customers was up nearly 25 per cent year on year to 274,000. Revenue per online marketing customer rose 50.8 per cent to 8,900 yuan.
'Search is now the most widely used internet application in the country,' chief executive Robin Li Yanhong said. 'This gives Baidu plenty of room to further develop the market.'
According to market researcher Analysys International, Baidu's domestic internet search market share advanced to 75.8 per cent in the first quarter from 64.2 per cent a year ago.
In contrast, global online search giant Google lost business on the mainland since its row with Beijing in January last year. It had a 19.2 per cent market share last quarter, down from 31 per cent a year ago.
Data from the China Internet Network Information Centre showed the mainland had 457 million internet users at the end of last year, up 73.3 million from 2009.
To support the company's long-term growth, Baidu chief financial officer Jennifer Li Xinzhe said the focus would be on significant spending in 'research and development, marketing, network infrastructure and other strategic investments over the coming quarters'.
She said capital expenditure reached 390 million yuan in the first quarter, up from 360 million yuan in the fourth quarter of last year. Most of that spending was to buy server computers for its expanding data centre operations.
Nasdaq-listed Baidu forecast its revenue in the second quarter to range from 3.23 billion yuan to 3.3 billion yuan, representing a 68.7 to 72.4 per cent year-on-year increase.
According to a report from Morgan Stanley, Baidu may see increased competition in its core paid search business. 'Alibaba Group, which operates the [mainland's] largest e-commerce platform, has been aggressively venturing into the paid search business,' it said.
Greater market share and advertising income lifted Baidu's net profit
The mainland company's turnover in the first quarter increased by more than: 88%