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DJ Baidu 3Q Profit Doubles; Shares Up As Results Beat Expectations
DOW JONES NEWSWIRES
Baidu Inc.'s (BIDU) third-quarter earnings doubled on more users and better monetization of them, as China's top Internet search engine continues to benefit from Google Inc.'s (GOOG) petering presence there.
The company's American depositary shares rose 2.2% after-hours at $104.71 as the company beat expectations. The ADS have more than doubled so far this year, in late September hitting their highest level since they began trading five years ago.
Baidu predicts fourth-quarter revenue will range from CNY2.37 billion ($354.2 million) to CNY2.44 billion, compared with the CNY2.42 billion average estimate from a survey of analysts by Dow Jones Newswires. Conversion rates are based on the noon buying rate in New York on Sept. 30.
Baidu, which derives about 95% of its revenue from search advertising, has been seen overtaking Google Inc.'s (GOOG) share of the Chinese search market. Google stopped operating its Chinese search engine earlier this year and began rerouting mainland users to its Hong Kong site in protest of Beijing's search-result censorship rules.
According to research firm iResearch, Baidu's market share rose to 72.9% in the third quarter, up three points, while Google's share fell 2.7 points.
Chairman and Chief Executive Robin Li attributed the strong third-quarter results to initiatives that expanded customer base and improved customer service. Active online-marketing customers rose 26% to 272,000, as revenue per customer surged 41%.
Last year, Baidu started using Phoenix Nest, a keyword-based advertising system it developed that the company says enables it to make more money on search terms.
Baidu posted a profit of CNY1.05 billion, or CNY3 per ADS, up from CNY492.9 million, or CNY1.41 per ADS, a year earlier. Analysts surveyed by Dow Jones predicted earnings of CNY2.71 per ADS.
Revenue surged 76% to CNY2.26 billion. In July, the company gave an upbeat target of CNY2.2 billion to CNY2.26 billion.
Earlier this week, a Baidu executive said the company is studying an expansion into foreign markets, looking principally at other Asian regions for now. A search engine in Japan is its only foreign operation.
The company also launched a platform for users to run applications through the Baidu website last month, offering software similar to what is available on sites like Facebook or platforms like Apple Inc.'s (AAPL) App Store.
Source: Joan E. Solsman, Dow Jones Newswires