Chinese search leader Baidu misses analyst estimates
Milk scandal dampens resultsSAN FRANCISCO -- Chinese Internet search leader Baidu Inc. fell short of Wall Street expectations in the fourth quarter and reported its first sequential sales decline since going public in the United States in 2005.
Analysts said the poor showing was anticipated, pointing to research notes in recent weeks that warned Baidu's results would not meet Street estimates. Shares of the company fell 0.85 percent in after-hours trading.
"Sentiment has already been negative and expectations lower, so the stock is kind of cushioned," said James Lee, an analyst with Sterne, Agee & Leach.
Baidu cut its fourth-quarter sales estimate in December, citing the slowdown in China's economy and the company's decision to remove paid listings from medical and pharmaceutical firms for which it did not have licenses on file.Baidu said on Wednesday that these removals lopped off about 5 percent from revenue, which will have an impact in the first quarter.
Sales in the first quarter will range from $114 million to $117 million, Baidu said, compared with the $119.5 million expected by analysts surveyed by Reuters Estimates.
Fourth-quarter net profit rose to $42.3 million (288.7 million yuan), or $1.22 a share, from $30.1 million, or 87 cents a share, in the same period last year.
Earnings excluding special items were $1.31 per share, short of the average analyst forecast of $1.42, according to Reuters Estimates.
Revenue was $132.2 million, up 58 percent year-over-year but down roughly 2 percent from the third quarter, compared with the dampened Wall Street estimate of $133 million.
Baidu trails Google Inc. and Yahoo Inc. in market share in Internet searches worldwide, but is the No.1 player in China, according to comScore.
The company ended the fourth quarter with $390.4 million in cash, cash equivalents and short-term investments, and said it had 197,000 active online marketing customers, a 1.5 percent increase from the third quarter.
Chief executive Robin Li said in a statement that Baidu ended the fourth quarter with a "higher quality customer base" and tighter operational controls.
Lee, the Sterne, Agee & Leach analyst, said a conference call scheduled for later on Wednesday would give investors a chance to find out if Baidu expects any regulatory issues related to the medical listings affair, and to learn how much of a rebound Baidu experienced following the Chinese New Year, which fell on Jan. 26 this year.
Shares of Baidu fell to $127.00 in after-market trade from a close of $128.09 on Nasdaq.