* Baidu Q2 revenue up 59.8 pct to $858.8 million year/year
* Q2 earnings per ADS $1.24 vs Street’s $1.11
* Baidu shares rise to $113.43 after hours
By Alexei Oreskovic
SAN FRANCISCO, July 23 (Reuters) – Baidu Inc posted
a roughly 70 percent rise in second-quarter profit on Monday,
beating Wall Street’s forecast, as the Chinese Internet search
company said it continued making progress on increasing its
number of customers.
Shares of Baidu, which hit an 18-month low last week on
concerns that a weakening Chinese economy would hurt its big
clients, were up roughly 6 percent after hours.
Baidu said net income in the three months ended June 30 was
up 69.6 percent to $436 million, or $1.24 per American
Depositary Share(ADS).
Analysts polled by Thomson Reuters I/B/E/S had been
expecting earnings per ADS of $1.11.
The upside to Baidu’s earnings were partially the result of
a lower tax rate, said Oppenheimer & Co analyst Andy Yeung. He
said, however, that the company’s results, including its revenue
outlook, underscored that business remained healthy for China’s
No.1 Internet search engine.
“For Baidu, because of their dominant position in search,
they’re able to extract more pricing power in terms of
advertising keywords,” said Yeung.
The company said third-quarter sales would be in the range
of $983 million and $1.009 billion. Analysts had been expecting
third-quarter revenue of $992.7 million.
Baidu has expanded its share of the Chinese search market
since Google Inc decided in 2010 to relocate its search
engine to Hong Kong after a standoff with the Chinese government
over Internet censorship.
Baidu is expanding aggressively into the mobile sector to
take advantage of booming growth in mobile searches. In May, it
launched a cheap smartphone with Foxconn Technology Group,
Sichuan Changhong Electric Co and China Unicom
.
Baidu said its second-quarter revenue was $858.8 million, a
hair above the midpoint of its own forecast, an increase of 59.8
percent over the corresponding period in 2011.
The robust revenue growth underscores how Baidu’s small
mom-and-pop advertising customers continue to use the search
engine for marketing, even as the broader Chinese economy faces
challenges, said Tian Hou of T.H Capital Research.
“When the general economy is down, Baidu can continue to
grow,” she said. “The business is quite resilient.”
Baidu shares rose to $113.43 after hours after closing at
$107.10 on the Nasdaq on Monday. The shares, a favorite of
long-only funds and hedge funds, have lost 7.7 percent since the
start of the year.
