Baidu's Quarterly Net Profit Surges 79%
China's Baidu.com on Wednesday reported a better-than-expected 79 percent surge in quarterly profit, while cautioning that its current quarter would be weaker amid heavy winter
Reported profit for the fourth quarter blew past all forecasts by financial analysts, sending its shares up 7.7 percent in extended trade to $281, which built on a 6.4 percent rise during regular session Nasdaq trade ahead of the report.
Underlying its growth is the fact Baidu is the dominant provider of Web search services in a country soon to become the world's biggest Internet market by users.
But despite the nearly 15 percent gain in Tuesday trading overall, Baidu shares remain 28 percent below where they started the year, amid a sharp decline in global stock markets. The Chinese Internet darling more than tripled last year.
The Beijing-based company said fourth-quarter net income rose to 219.8 million yuan, or $30.1 million and 87 cents a diluted share, compared with 123 million yuan, or $15.7 million and 45 cents per share, in the year-earlier quarter.
Excluding one-time items, the company reported a profit of 92 cents per share in the latest quarter. The costs of Baidu's expansion from China into Japan cut reported profit by 10 cents per share, the company said.
Analysts had predicted a net profit, on average, of 71 cents per share, according to Reuters Estimates. Excluding one-time items, the average forecast among analysts was 75 cents a share.
Revenue rose 125 percent to $78.3 million. Analysts targeted revenue, on average, of $77.2 million, according to Reuters Estimates. Forecasts ranged from $71.2 million to $83.3 million, putting revenue well within anticipated bounds.
Baidu competes against global Web search leader Google , which ranks a distant No. 2 to Baidu in China.
Fourth-quarter traffic acquisition costs, or payments to affiliated Web sites that rely on Baidu to provide them with Web search and advertising, represented 12.7 percent of revenue compared with 8.7 percent in the final quarter of 2006.
The company cut its first-quarter revenue outlook to a range from $73.1 to $75.1 million. China has been hit by the coldest winter in a century in the populous southern and central parts of the country, which has cut power and Internet access for many consumers.
Analysts had been looking for revenue, on average, of $77.9 million, according to Reuters Estimates. Forecasts ranged from $70.6 million to $89.2 million.
Analysts had originally anticipated revenue for the current quarter ending in March to increase compared with the prior quarter ended in December.
RBC Capital analyst Stephen Ju had cut his first-quarter outlook prior to the report based on the harsh winter weather and distractions for the company created by the sudden death of its chief financial officer, Shawn Wang, on Dec. 30.
These factors have added to the typical weeks-long seasonal slowdown seen at the Chinese New Years' holiday.
Baidu shares , rose 6.1 percent after the close on Wednesday. Shares were up at $277 in after-market trade after closing at $261.09.