Baidu (BIDU) Shares Stumble With Shareholders on Earnings News

After gapping up on the first day of the year with most other ‘aggressive’ stocks, Chinese search giant Baidu (NASDAQ:BIDU) spent most of January doing very little while the market was in the midst of a surge.  Over the past week or so, the company has shown some signs of life as investors began to front run the earnings report.  Perhaps with this out of the way, the stock will begin to act more in line with a lot of other names it typically moves with.


As for earnings, more substantial growth and guidance that is more or less in line – as always it is a matter of valuation, as Baidu is already a $50B market cap company.  But you simply are not going to find many companies out there growing revenue 80% year over year.  And they have yet to really enter the monetization of the mobile arena.  The stock is indicating a slightly positive reaction in the premarket.

Via Reuters:

  • China’s top search engine, Baidu Inc (NASDAQ:BIDU), plans to begin monetising its mobile search traffic and social media platforms this year in an effort to boost growth outside its traditional PC domain, Baidu’s chief executive said on Friday.  On Thursday, the company reported fourth-quarter earnings slightly ahead of Wall Street’s estimates on strong revenue growth.
  • “We do think mobile will become a very important channel to distribute our products and that has increasingly become true over the past quarter. And we think during the coming year, mobile will represent an ever larger percentage of our total traffic,” Robin Li, chief executive of Baidu told an earnings conference call.
  • While investors are concerned that a softer Chinese economy would hurt advertising sentiment, Baidu’s (NASDAQ:BIDU) Chief Financial Officer Jennifer Li said she did not see such a big impact from the macroeconomy.  “We do not read too much into the macro environment,” she said, adding that large clients’ spending would continue to contribute to the bulk of Baidu’s revenue growth.
  • Baidu’s revenue came in at $710.9 million, a hair above the average analyst expectation of $708.8 million. At this time last year, Baidu reported revenue of $371.3 million.  Baidu reported fourth-quarter net income of $326.3 million, or 93 cents per American depositary share. Analysts, on average, were looking for earnings of 91 cents per ADS, according to Thomson Reuters I/B/E/S.
  • Baidu said it expects first-quarter revenue of $666.5 million to $688 million. Analysts polled by Thomson Reuters I/B/E/S were looking for revenue of $678.8 million.
  • In the fourth quarter, China’s online search market grew 70.2 percent to 568 billion yuan, according to technology consulting firm iResearch. For 2011, Baidu had a 76.1 percent share of the market, while Google had 19.8 percent.
  • The company added 35,000 new active online marketing customers over the quarter, bringing the total to 311,000.  Revenue per online marketing customer was $2,288 at the end of the quarter, + 62% y/y.

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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). Trader Mark also authors the blog Market Montage.

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