* Baidu posts slowest revenue growth in more than 2 yrs
* Q4 revenue guidance misses analysts' forecasts
* Adds record number of new advertisers in Q3
* Aims to improve earnings from mobile advertising
By Melanie Lee
SHANGHAI, Oct 30 Baidu Inc, China's
largest search engine company, posted its slowest quarterly
revenue growth in more than two years and forecast
softer-than-expected growth this quarter, hurt by weaker sales
as China's economic engine sputters.
However, the company -- which still grew revenue by 50
percent in the third quarter -- said it added a record number of
new advertisers for the quarter and was focusing on boosting
revenue from fast-growing mobile search traffic.
"Their large customers' spending has not been so robust and
has been quite flat, but Baidu has done a decent job of bringing
new customers online," said Michael Clendenin, managing director
of technology consultancy firm RedTech Advisors.
Baidu has dominated China's search market since Google Inc
relocated its search engine to Hong Kong in a row over
censorship in 2010, and accounts for nearly 80 percent of all
It posted net income of $478.6 million in the three months
ended Sept. 30, up roughly 60 percent year-on-year. Baidu said
it earned $1.39 per American Depository Share in the third
quarter, excluding stock-based compensation expenses.
Revenue rose 49.7 percent to $994.6 million, and Baidu
forecast fourth-quarter revenue of $979.3 million to $1.010
billion, below an average analysts' forecasts of $1.03 billion
according to Thomson Reuters I/B/E/S, but up from $715.9 million
a year ago.
Despite a slowdown in spending by its big advertising
customers, Baidu said it added a record number of advertisers in
the third quarter and now had a total 390,000 active online
Credit Suisse downgraded the company in October to
"underperform" from "neutral", due to concerns about its ability
to monetize its mobile search traffic and worries about the
erosion of its search market dominance.
Baidu Chief Executive Robin Li said on Tuesday that the
firm's PC search traffic was "not as exciting" as mobile search
traffic, which was growing at triple digit rates.
"We are working hard to improve the monetization system for
mobile and to educate our customers to take full advantage of
mobile," Li told analysts on a phone hook-up.
"But we expect it would take some time to close the gap," he
added, referring to both effective monetization and moving
advertisers to mobile devices.
Baidu is also facing a challenge from China's top anti-virus
software firm, Qihoo 360 Technology. A search engine
launched by Qihoo in August has started to gain traction,
accounting for 5-10 percent of search traffic since its launch,
according to data from research firm Analysys International.
But analysts don't expect Qihoo to peel away much of Baidu's
search market dominance because of the sheer size of the
"It's been one of these emotional hangovers on the (Baidu)
stock but the reality is Qihoo is not monetizing and won't be
monetizing probably until Q1 and even then it will be at a very
small base," Clendenin said.
Baidu shares have fallen about 2 percent this year on
expectations that it will be hurt by slower economic growth in
China, underperforming a 14 percent rise on the Nasdaq exchange.