| Tech Stock News and Analysis |
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| Thursday, July 27, 2006 |
Baidu.com Inc. (BIDU) said quarterly profit nearly quintupled and forecast third-quarter sales would almost triple, but its stock fell sharply as China's Web search leader succumbed to lofty expectations.
The Beijing-based company posted a second-quarter profit of $7.3 million (58.5 million yuan), or 21 cents per diluted share, that far surpassed the year-earlier quarter's $1.5 million.
However, the results fell squarely in line with analysts' consensus forecast and appeared to disappoint investors looking for the company to outperform, as it has in previous quarters.
Baidu shares slumped about 15 percent to $78.50 in after hours trade, after more than doubling to about $92 since sinking to a post-IPO low of $45.15 in early February.
"The numbers are quite good. But investors have been buying shares and have their own expectations," said Qiu Changhua, an Internet analyst with U.S.-based Forun Technologies.
"At these prices it is still attractive," said Qiu.
Revenue jumped 175 percent to 191.6 million yuan, or $24.0 million. Analysts were looking for revenue, on average, of $23.4 million, with forecasts ranging from $22.2 million to $24.4 million, according to Reuters Estimates.
Analysts were looking for a net profit, on average, of 16 cents per share. Excluding one-time items, the consensus was for 21 cents per share, according to Reuters Estimates.
Q3 PROFITS SLIPPING Q/Q?
Baidu also forecast that third-quarter revenue would range between $30 million and $31 million, at the top end of analysts' expectations, which ranged between $27.6 million and $30.9 million, according to Reuters Estimates.
However, analysts are expecting profits at Baidu -- which saw its shares shoot above $150 in the days after going public a year ago -- to slip slightly in the third quarter to $0.19 from the last quarter, but much higher than the $0.03 earned in the year-earlier period.
The company commands just under half of the traffic from China's more than 110 million Web surfers, versus an estimated 30 percent for Google, which holds a dominant lead in the overall global market, according to analysts' reports.
Baidu results contrast with major U.S. Internet players who are generating hundreds of times more revenue but at far slower growth rates. Google Inc. posted a 77 percent rise in quarterly revenue while Yahoo Inc. grew 26 percent.
The company said it was still not focusing on profits and said revenue growth and expansion remained its priorities.
"We are guiding very strong revenue growth going forward," Shawn Wang, Baidu's chief financial officer.
"However, we want to caution that we are making aggressive investment in sales and marketing. We are rapidly building a large direct sales presence."
"All of which are likely to have a near term negative impact on the bottom line," said Wang.
Revenues for Chinese Internet company Sohu.com Inc. are expected to grow about 30 percent from a year earlier when it posts results later this week and SINA.com is forecast to grow just 7 percent.
But Baidu is spending more to fend off Google -- which just this year launched a Chinese version of its Web search system -- along with Yahoo and domestic Chinese rivals, analysts say. (US$=7.98 yuan) |
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