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Baidu profit beats estimates

Beijing - Baidu, the owner of China’s largest Internet search engine, posted second-quarter profit that beat analysts’ estimates as advertisers boosted spending to reach mobile users.

Net income rose to 3.55 billion yuan ($572.5 million) in the three months ended June from 2.64 billion yuan a year earlier, the Beijing-based company said in a statement today.

People talk in front of a Baidu's company logo at Baidu's headquarters in Beijing January 16, 2014. Credit: Reuters

That beat the 2.85 billion-yuan average of nine analysts’ estimates compiled by Bloomberg.

Baidu is developing applications for mapping and search services to reach users on tablets and smartphones as it competes with Alibaba Group and Tencent Holdings in the world’s largest Internet market.

China had 632 million Internet users as of June, with 83 percent of them using mobile phones to access the Web, according to the China Internet Network Information Center.

“We are still in the very early stages and growth expectations are quite high from mobile traffic,” Sam Gu, a Hong Kong-based analyst with First Shanghai Securities said before the results were announced.

“Users of mobile apps are the fastest growing traffic source so this is a great market to capture.”

Revenue surged to 12 billion yuan from 7.56 billion yuan, in line with the 12 billion-yuan average of 11 analysts’ estimates compiled by Bloomberg.

Baidu shares gained in extended trading after the report.

They rose 2.1 percent to $204.27 at the close in New York.

The stock has climbed 15 percent so far this year.

Baidu forecast third-quarter revenue of 13.4 billion yuan to 13.8 billion yuan.

That compares with the 13.3 billion-yuan average of 10 analysts’ estimates.

In China, the company accounted for 75.7 percent of search engine queries in the first quarter, according to Bloomberg Intelligence.

Qihoo 360 Technology accounted for 16.4 percent, and Sogou, 36.5 percent owned by Tencent, held 5.1 percent. - Bloomberg News

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