Baidu.com gives quarterly outlook
By Bambi Francisco, MarketWatch
Last Update: 6:23 PM ET Aug. 23, 2005
SAN FRANCISCO (MarketWatch) -- Chinese Internet company Baidu.com said late Tuesday that it expects sales of as much as $10 million in the third quarter.
Baidu (BIDU: news, chart, profile) , a search engine that just went public and ballooned to a market valuation of roughly $5 billion, said it expects to generate between $9.6 million and $10 million in the current quarter. This would represent growth of as much as 151% above last year's sales, but only 19% from the previous quarter.
The company offered its outlook at the same time that it released its first earnings report since going public earlier this month, at $27 a share.
In the report, Baidu reiterated its second-quarter results, which were first publicized in the company's prospectus with the Securities and Exchange Commission.
Baidu said it estimates that it generated a total of $8.4 million in total sales in the second quarter, up 53% from $5.5 million during the previous quarter. The rise was due to a "substantial increase" in online marketing sales, Baidu indicated.
The company also anticipates that it earned $1.5 million in net income, up 384% from a profit of $300,000 in the first quarter of 2005.
Baidu ended Tuesday's regular trading session at $82, up 12%. But shares fell slightly in after-hours action, partly due to concerns the third quarter isn't as robust as some investors would like.
The third-quarter outlook suggests a growth rate of 19% quarter over quarter, down from 53%. See Net Sense: Baidu's wake-up call.
Either Baidu's business is decelerating quickly, or the company is being conservative. For the full year, Baidu is expected to earn 42 cents a share on sales of $32 million in net revenue this year.
While Baidu is often compared with search giant Google (GOOG: news, chart, profile) , the Chinese search firm has only a small percentage of the revenue and net income that the Silicon Valley Internet company did when it went public last year.
According to iResearch, the number of online-search users in China is projected to grow from 115 million in 2005 to 187 million in 2007, as cited in Baidu's IPO prospectus. Total online marketing revenue in China would amount to approximately $130 million in 2004, according to a study by IDC.
"The paid search market is expected to be the fastest-growing segment of online marketing in the Asia-Pacific region (excluding Japan) through 2007," Baidu.com said in its IPO filing.
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