Baidu shares drop after disappointing profit
Shares of Baidu fell below US$200 during after-hours trading in the United States as China’s online search market leader reported fourth-quarter earnings that missed analysts’ estimates.
Nasdaq-listed Baidu posted a 16 per cent rise in net profit to 3.23 billion yuan in the quarter ended December 31, from 2.78 billion yuan a year earlier.
Its net profit, however, was lower than the 3.5 billion yuan average estimate of analysts surveyed by Bloomberg.
Baidu reported higher promotional spending on mobile products and services, as well as research and development costs.
Alicia Yap, the head of China internet research at Barclays, said in a recent report that Baidu was expected to continue its investments in sales, marketing and promotional campaigns, as well as boost research and development spending.
Baidu’s share price fell 2.17 per cent to close at US$214.67 at the end of regular trading on Nasdaq. In after-hours trading, its shares tumbled 9.82 per cent to US$193.60.
The company’s fourth-quarter revenue grew 47.5 per cent to 14.05 billion yuan from the previous year, on the back of robust mobile income growth.
Turnover was near the high end of its guidance for the quarter between 13.58 billion yuan and 14.25 billion yuan.
“We’ve successfully transitioned from a PC-centric to a mobile-first company, positioning us well for the next phase of our mobile opportunity: connecting people with services,” chairman and chief executive Robin Li Yanhong said in a statement released on Wednesday in the United States by Baidu. “In December, for the first time, search revenue from mobile surpassed PC.”
The company estimated that mobile-search-related sales accounted for 42 per cent of total revenue in the fourth quarter.
We’ve successfully transitioned from a PC-centric to a mobile-first company, positioning us well for the next phase of our mobile opportunity: connecting people with services
Its online marketing revenue grew 46.3 per cent to 13.84 billion from a year ago as the number of active online marketing customers increased 16 per cent to 523,000.
Revenue per online marketing customer last quarter advanced 26.3 per cent year on year to 26,400 yuan.
Selling, general and administrative expenses swelled 89.2 per cent to 3.52 billion yuan, primarily due to greater spending on mobile products and services.
Research and development expenditure climbed 69 per cent to 2.14 billion yuan as the company hired more personnel for this operation.
Jennifer Li, Baidu’s chief financial officer, forecast more investments this year as the company executes on its plan “for the next phase of mobile growth”.
For the whole of last year, Baidu reported a 25.4 per cent increase in net income to 13.19 billion yuan from 2013. Total revenue last year saw a 53.6 per cent growth over 2013 to 49.05 billion yuan.
Baidu forecast its first-quarter revenue this year to range from 12.64 billion yuan to 13.06 billion yuan – a 33.2 to 37.6 per cent year-on-year increase.
In a research note published on Thursday in Hong Kong, Yap said Baidu’s first-quarter guidance was less than Barclays’ forecast of 13.4 billion yuan and the market consensus estimate of 13.47 billion yuan. Yap attributed that company guidance “to the late Chinese New Year and higher contribution from lower-cost mobile search” sales.
