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Chinese internet search giant Baidu (NSDQ: BIDU) reported a 95 percent increase in net income on Monday, beating Wall Street expectations and sending the company’s shares up nearly seven percent in after-hours trading. Baidu said strong traffic growth and increased ad spending powered the blockbuster results, which came amid fears of an economic slowdown in China. Baidu’s American depository shares rose 6.84 percent after hours to $167.03. The company’s stock price has already soared over 60 percent this year.
Baidu’s rapid growth underscores the booming Chinese internet economy, which is beginning to take off. China has more internet users than any other country. “The search market is growing very strongly,” Collins Stewart analyst Mayuresh Masurekar told Reuters. “It’s a rising tide.”
Baidu reported second-quarter revenue of $528.4 million, a 78.4 percent increase from one year ago, and net income of $252.6 million, a 95 percent increase over last year.
“We benefited from strong traffic growth and improved monetization,” Robin Li, chairman and chief executive officer of Baidu said in the earnings release
In addition to posting impressive revenue and income gains, Baidu issued a better-than-expected forecast for the next quarter. The company said it expects to generate revenues of $611.1 million to $626.6 million for the third quarter of 2011, which would be a 75.1 percent to 79.5 percent increase over last year. Wall Street analysts had expected the company to forecast $569.6 million.
Baidu dominates the Chinese web search market, with 75.9 percent market share by revenue, according to data from Analysys International cited by Bloomberg. U.S. web leader Google (NSDQ: GOOG), which relocated its Chinese-language search engine to Hong Kong last year after a dispute over censorship, has 18.9 percent of the market.
China’s online ad market is growing at about 45 percent per year, according to Reuters, despite concerns over slower economic growth ahead.