Baidu may not beat Q4 Street view on increased costs
Share thisLink this diggEmailStocks Baidu, Inc. BIDU.O $106.54 -2.51-2.30%12:00am PST GOOGLE INC. GOOG.O $600.99 -15.80-2.56%12:00am PST Sou Hu Gong Si SOHU.O $73.88 +0.73+1.00%12:00am PST Fri Jan 28, 2011 4:31am EST
* What: Baidu's Q4 earnings
* When: Baidu reports on Jan 31 after U.S. market hours
* Baidu to post in-line results, margins seen slightly lower
* E-commerce seen as next boost to paid search
* Shares rose around 135 pct last year
By Melanie Lee
SHANGHAI, Jan 28 (Reuters) - China's top Internet search engine Baidu Inc (BIDU.O), which beat profit expectations in the past four quarters, is unlikely to repeat that for the fourth quarter as margins slipped and new customer additions slowed.
Baidu, a favourite pick of hedge funds, has already flagged that 2011 will be different, telling Reuters in December it expects growth this year to moderate due to a higher comparison base and as the unique factors that spurred rapid growth in 2010 won't be repeated. [ID:nL3E6NF0O9]
Baidu will likely forecast first-quarter revenue in line with Wall Street estimates and its fourth-quarter margins may be crimped as traffic acquisition costs (TAC) as a proportion of revenue, a key component of the firm's overall costs, go up, analysts said.
"There is less room for them to surprise on the upside now but they will still come up on the high end of their guidance," said Hong Kong-based CLSA analyst Elinor Leung.
"It (TAC) dropped in Q2 and in Q3 but I think the (upward) trend will continue, that's why we expect margins to go down," Leung said.
China's search market grew 67 percent in the fourth quarter to 3.2 billion yuan ($486 million) with Baidu holding a dominant 73 percent of the market by revenue compared with Google's (GOOG.O) 24 percent, according to data from iResearch.
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Baidu is expected to post revenue of $360.8 million in the fourth quarter, according to a poll of 15 analysts by Thomson Reuters I/B/E/S. This is in the range of the firm's own forecast of $354.2 million to $364.7 million.
Analysts expect Baidu to post revenue of $354.1 million in the first quarter, an 86 percent increase over the previous year, according to Thomson Reuters I/B/E/S.
Leung of CLSA said an early Lunar New Year this year will help Baidu's first-quarter results as advertisers tend to hold off spending till after the week-long holiday. She expects Baidu to say first-quarter revenue will rise about 88 percent.
"The big growth step curve we saw over the last two or three quarters is largely behind us," said Nomura analyst Jin Yoon.
Although the strength of Baidu's main competitor in China's search market has diminished, the firm still faces competition from local players such as Alibaba Group and Sohu.com (SOHU.O).
E-commerce, which is expected to drive search traffic in the coming years, is dominated by Alibaba Group, which owns China's largest business-to-business and online shopping platforms.
China's e-commerce transaction value grew 33.5 percent to 4.8 trillion yuan in 2010 and is expected to grow to 20.4 trillion yuan by 2014, according to iResearch. Analysts expect the market boom to drive up online advertising and paid search.
Last year, Alibaba Group's Taobao launched a test version of its own e-commerce search site Etao, while Baidu linked up with Japanese online retail Rakuten (4755.OS) to form an online mall.
Baidu shares have risen around 10 percent this year, after rising around 135 percent last year.
It was the only Asian name in the top 100 holdings of the world's 30 biggest hedge funds in the third quarter of 2010, according to Thomson Reuters' StreetSight. The hedge funds increased their holdings of Baidu by roughly a fifth in the third quarter from the second quarter, the data showed.
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GAPP Warns Online Video Sites, Baidu Over Piracy Cnr.cn, 1/28/11
Wang Zhicheng, deputy chief of the Department of Copyright Administration of China's General Administration of Press and Publication (GAPP), criticized a number of Chinese online video sites as well as Chinese internet company Baidu (Nasdaq: BIDU) at a ceremony in Beijing today announcing the launch of GAPP's "Operation Sword-Net" anti-piracy campaign.
Representatives of 14 major foreign and domestic IP-holding companies and 18 online video sites attended the ceremony.
In September 2010, GAPP called on 15 major online video sites to review the top 50 most-viewed films and top 50 most-viewed TV programs on their own website as well as the top 100 most-viewed films and top 100 most-viewed TV programs across all online video sites, and report the results to GAPP.
Wang Zhicheng said that GAPP had criticized UUSee and VeryCD for not eliminating pirated content from their sites and included both on a list of companies to face increased scrutiny, while Shanda Interactive (Nasdaq: SNDA) video subsidiary Ku6 (Nasdaq: KUTV) and Tencent (0700.HK) received warnings for submitting reports with significant discrepancies when compared to GAPP's own findings. Wang also warned that Baidu's "so-called" video search site Baidu Video would be held legally responsible if providing search results linking to IPR-infringing content. Together, the 18 online video companies participating in the anti-piracy campaign account for 95% of the market.
Editor's Note: For more background on this topic, please see "Chinese Authorities Initiate Piracy Crackdown" MD 7/22/10 issue.
Baidu Ahead of Earnings Written by Gerard Lerod Friday, 28 January 2011 10:33
New York, January 28th (TradersHuddle.com) - Shares of Baidu, Inc. (NASDAQ:BIDU) are trading lower by -0.50% ahead of its quarterly earnings release. Baidu, the largest Chinese Internet search engine is expected to release its quarterly results on January 31st.
Wall Street Analysts consensus calls for a profit of $0.45 a share on $362.22 million revenue.
Baidu estimates have a range of $0.14 a share. The high estimate calls for profit of $0.51 a share and the low estimate is calling for a profit of $0.37 a share, a year ago for the quarter the company reported $0.18 a share.
Baidu, Inc. (NASDAQ:BIDU) provides Chinese language Internet search services primarily in China and Japan. The Company offers algorithmic search, enterprise search, pay for performance and news, MP3, and image searches.
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