Baidu profit increases, with outlook upbeat

By Joan E. Solsman
Baidu Inc.'s (BIDU 711.00, +89.62, +14.42%)  first-quarter earnings more than doubled, beating analysts' views, as revenue jumped more than the Chinese Internet giant expected to a record high.

Baidu's American depositary shares were up 14% at $707.57 after hours, a new high, as the company also projected current-quarter revenue of $268.1 million to $274 million. That compares with the $240 million average of analysts surveyed by Thomson Reuters.

The company also announced it planned to change the ratio of 10 American depositary shares for every one Class A ordinary share, rather than the previous 1:1 ratio. The change will have the same effect as a 10-for-1 ADS split.

Active online-marketing customers grew 20% to 221,000, as revenue per customer climbed 34%. The first quarter represents the first full three-month period with its Phoenix Nest advertising system in operation. The system is more complicated, which raised some initial worries it would alienate advertisers, but the keyword-based system better monetizes search terms.

"Phoenix Nest's performance continued to exceed our expectations as customers increasingly appreciate the new platform's advanced tools and superior return on investment," Chairman and Chief Executive Robin Li said Wednesday.

The company benefited from Google Inc.'s (GOOG) disagreements with the Chinese government. After a cyberattack from China early in the quarter, Google last month finally made good on its warnings it would cease operating its self-censored Chinese site. Instead, it began redirecting Chinese users to its Hong Kong site, which the Chinese government itself censors for mainland users and won't garner as much traffic.

Baidu posted a profit of 480.5 million Chinese yuan ($70.4 million), or CNY13.77 ($2.02) per ADS, from CNY181.1 million, or CNY5.22 per ADS, a year earlier. Analysts predicted $1.50.

Revenue increased jumped 60% to CNY1.29 billion ($189.6 million). In February, the company gave an upbeat target of $176 million to $181 million.

Conversion rates are based on values at the end of the quarter.

Source: www.marketwatch.com