Baidu beats Wall Street profit target
SAN FRANCISCO (Reuters) - Baidu Inc (BIDU.O) 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 (GOOG.O) 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 (600839.SS) and China Unicom (0762.HK).
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.
(Reporting By Alexei Oreskovic in San Francisco and Melanie Lee in Shanghai)
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