China's Baidu Posts First-Quarter Net Income of $328.9 Million

8:24 PM PST 04/25/2013 by Clarence Tsui

The Internet search-engine operator announces 8.5 percent and 40 percent year-over-year increases in net income and total revenues, respectively, from January to March.

HONG KONG – Beijing-based Chinese-language Internet search provider Baidu has reported year-over-year increases in both operating profits and total revenues for the first quarter of 2013, while also claiming to have increased its daily active users by 25 percent from the end of 2012.

In a statement announced Thursday night East Coast time, the company reported net income from January to March as $328.9 million (2.04 billion yuan), an increase of 8.5 percent from the same period in 2012. The company also said total revenue jumped to $961 million (5.97 billion yuan) – a year-over-year leap of 40 percent, and within range of the company’s predictions in February.

Robin Li, Baidu’s chairman and CEO, described the results as “healthy,” revealing how the company’s online search engine has now more than 100 million active daily users – an increase of more than 25 percent from the end of fourth-quarter 2012, he said. Released figures also showed that Baidu has 410,000 active online marketing customer in the first quarter of 2013 – a year-over-year increase of 27.7 percent.

“Continually developing the most advanced search technology remains central to Baidu’s oversall strategy, and we’re very excited by the possibilities opened up by innovation in image and voice recognition,” said Li. “Our focus will remain on tightly integrating our leading search core with valuable vertical products in areas such as travel, e-commerce and location-based service to bring users the information they want as quickly as possible on both desktop and mobile devices.”

Baidu CFO Jennifer Li said the company “remain[s] committed to investing aggressively,” pointing out specifically in the fields of marketing and research and development. “For the quarter, we also recognized a whole quarter consolidation of iQiyi,” she said.

Li was referring to the online video platform Baidu established in 2010, a service dubbed as the “Chinese Hulu” for its business objective of facilitating the distribution of legal, professionally produced content to online users in China. According to a Bloomberg report quoting information provided by Analysys International, iQiyi (which held 6.7 percent of the market) is ranked behind Youku Tudou (32.4 percent) and Sohu.com (10.9 percent) in its take of the online video market in the country.

Analysts have pointed to iQiyi’s struggle of establishing a solid foothold in the market as contributing to Baidu’s modest business performances, and CEO Robin Li admitted that the service is “still burning money” during an earnings conference call Thursday night, but added he is confident of iQiyi becoming profitable in the long term.

Li declined to discuss reports circulating in the Chinese press on Wednesday about iQiyi purchasing Shanghai-based video-streaming portal PPStream. “Obviously we do not comment on any specific rumors,” he said. “I just can tell you we like the online video business, and we’ll continue to invest.”

The company results statement also forecasts second-quarter total revenue ranging from $1.19 billion (7.37 billion yuan) to $1.22 billion (7.55 billion yuan), representing a year-over-year increase of 35.1 to 38.4 percent.

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