Beijing-based Chinese language search engine company Baidu.com, Inc., one of the most used search Web  sites in the world, has reported strong revenue growth for the third quarter of 2008 with net income rising by 91 percent and profits topping estimates forecast by Thomson Reuters, despite a decrease in usage during the Olympic games held in Beijing. Baidu released its financial results Wednesday following a five month period that has seen the company's share prices fall off about 33 percent. Baidu, which launched in September 2004, made a successful initial public offering on NASDAQ in August 2005 that led to inclusion in the NASDAQ-100 list, China's first company in the index. Share Prices Drop While Strong Growth In China Continues Baidu predicted fourth quarter revenue of between $151 million and $155 million, potentially higher than Wall Street expectations of $151 million, and company chairman and chief executive Robin Li said the strong third quarter results were partially due to Baidu's paid search initiatives. "I'm pleased to announce solid results for the third quarter," Li said in a statement accompanying the financial results. "Companies throughout China are increasingly recognizing the value of Baidu's paid search as an effective marketing tool," Li said. While the drop in Baidu stock price in recent months has followed the general downward trend of global markets, the company's growth in China has continued, and the fourth quarter predictions announced Wednesday would equate to one year growth of nearly 85 percent if realized. Such growth would continue the 85 percent revenue Baidu saw between the third quarter of 2008 and last year, an increase of $135.4 million. China's Baidu holds a 65.8 percent share of that country's search market, according to recent research from market analysis firm China IntelliConsulting Corporation, nearly tripling the 22 percent share held by Google, while another research firm, Analysys International, placed Baidu's share of the search engine marketplace by revenue for the third quarter at 63.4 percent. Baidu Beats Wall Street Expectations While global search leader Google held a relatively small 22 percent share of the search market in China according to the China IntelliConsulting research, the Analysys International figures showed the Mountain View, California-based company making a small gain on Baidu during the third quarter. Baidu had net income during the third quarter of $51.2 million, up from $24.2  million during the same quarter in 2007, and the company reported net profit of $1.47 per share, bettering a Reuter Estimates forecast of $1.27 per share. According to Reston, Virginia-based Web traffic research firm comScore, Baidu ranks as the third most used search engine worldwide, behind only Google and Sunnyvale, California-based Yahoo. Baidu attributed some of its growth to a 36 percent year to year increase in the number of digital marketing customers using the company's search advertising. About 194,000 online marketing customers used Baidu, up 7.2 percent from the 181,000 recorded in the second quarter, Baidu reported. Expanding Initiatives In China Baidu has made efforts to branch out from search including initiatives to better compete with Alibaba.com, China's largest online commerce company. "We are also quite confident that we have a dominant position in music search, web search and many other types of searches," Li said in a conference call with reporters Wednesday. "We still have a dominant position in China's music search market, and as for the music sharing market, we have partnerships with a lot of the radio stations across China," Li added. Hangzhou, China-based Alibaba.com was founded in 1999, and operates primarily as a trading service for businesses. Last week Baidu rolled out a test version of its consumer-to-consumer platform, which has been in development for the past year, in order to compete with the top similar service in China operated by Taobao, an affiliate of Alibaba.com. China's Top Search Engine Firm Baidu Reports Large Quarterly Profit "There is competition in the market, but our focus is meeting the information needs of our existing users," Li said. "The impact of the 2008 Beijing Olympics on our business was in line with our projection for the quarter. During the Games, traffic did drop and user behavior changed materially, but after the Games it all came back," Li added. Reaction to Wednesday's Baidu financial results announcement was mostly positive among some online Internet communities serving search engine marketing and optimization businesses. "It looks quite good for the Chinese search giant," noted one user of the WebmasterWorld online discussion forum, who used the handle "bill." Another member of the popular online community for webmasters and tech-savvy search professionals, using the handle "redstorm," predicted continued growth at Baidu. "Baidu will continue to grow at a rapid pace for the following two to three years, I estimate," the WebmasterWorld member noted. At the close of NASDAQ trading Thursday shares of Baidu were down $36.55, or 14.67 percent, to $212.54, with after-hours trading of the company down 0.25 percent to $212 per share. Related Links :
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9:38 pm on Oct. 23, 2008 (utc 0)