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Baidu Comes Up Short on Revenues and Guidance — China Web Maturing?

Baidu Inc. (NASDAQ: BIDU) reported its earnings on Monday evening. The leader in Chinese Internet search’s third-quarter earnings came in with a 49% revenue gain to RMB6.251 billion (about $994.6 million), and operating profit in the third quarter rose by…

By Jon C. Ogg
Published October 30, 2012, 6:46am ET · 1 min read

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Baidu Inc. (NASDAQ: BIDU) reported its earnings on Monday evening. The leader in Chinese Internet search’s third-quarter earnings came in with a 49% revenue gain to RMB6.251 billion (about $994.6 million), and operating profit in the third quarter rose by about 48% to RMB3.297 billion (about $524.6 million). Net income attributable to Baidu rose almost 60% to RMB3.008 billion, or about $478.6 million. That translated to earnings per ADS of $1.37 (EPS).

Thomson Reuters was calling for the equivalent of $1.28 EPS and $1.00 billion in sales for the third quarter.

While Baidu said that it is seeing good progress on mobile monetization, this progress is from a rather low base, and the CEO said that mobile monetization will involve an inevitable transition period.

Competition is now gaining from Qihoo 360 Technology Co. Ltd. (NYSE: QIHU). Baidu put its fourth-quarter sales growth at an implied rate of 37.6% to 41.8%, or to $979.3 million to $1.01 billion. Unfortunately, Thomson Reuters has estimates of $1.03 billion. Baidu is still expected to grow as it has that massive market share and the ever-growing Chinese Internet population.

Baidu’s close on Friday was at $113.84 and its 52-week range is $99.71 to $154.15. What is so hard to comprehend for many investors is that Baidu is still worth close to $40 billion, even after falling by about one-quarter from its peak.

JON C. OGG

Contact [email protected] for any questions or corrections.

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Jon C. Ogg

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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