Bloomberg News

Baidu Second-Quarter Profit Rises on Higher Ad Sales

July 23, 2012

Baidu Inc. (BIDU:US), owner of China’s most- used search-engine, said second-quarter profit rose 70 percent, beating analysts’ estimates, as the company increased advertising sales to new customers.

Net income climbed to 2.77 billion yuan ($434 million), or 7.86 yuan per American depositary receipt, compared with 1.63 billion yuan, or 4.67 yuan, a year earlier, Baidu said today in a statement. That exceeded the 2.5 billion-yuan average of 10 analysts’ estimates compiled by Bloomberg. Revenue rose 60 percent to 5.46 billion yuan.

Baidu added customers by stepping up marketing to smaller companies in China, countering a slowdown in the advertising market as economic growth weakens. Chief Executive Officer Robin Li is expanding in display advertising to customers including Procter & Gamble Co. (PG:US), and plans to add mobile users as more Chinese access the Web on smartphones.

“The smaller advertisers are helping the company,” Dick Wei, who rates Baidu overweight at JPMorgan Chase & Co. in Hong Kong, said before the earnings release. Still, “it’s the bigger customers who’ll drive growth,” Wei said.

Baidu fell 2.8 percent to close at $107.10 in Nasdaq Stock Market trading today before the announcement. The shares have declined 8 percent this year, underperforming the 46 percent gain in the Hong Kong-traded shares of Tencent Holdings Ltd. (700), China’s biggest Internet company.

Third-quarter revenue will be in a range of 6.25 billion yuan to 6.41 billion yuan, Baidu said. That compares with the 6.39 billion-yuan average of analysts’ estimates compiled by Bloomberg.

In the second-quarter, Baidu accounted for 78.6 percent of China’s search-engine market by revenue, compared with 15.7 percent for Google Inc. (GOOG:US), according to researcher Analysys International.

China’s online advertising market may expand by 39 percent this year to 65.1 billion yuan, slowing from 46 percent growth in 2011, according to a report by Nomura Holdings Inc. in June.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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Companies Mentioned

  • BIDU
    (Baidu Inc)
    • $200.12 USD
    • 1.69
    • 0.84%
  • PG
    (Procter & Gamble Co/The)
    • $79.99 USD
    • -0.11
    • -0.14%
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