“We continue to extend our lead as China’s number one search engine”: Baidu.com

China’s search engine Baidu.com posted “higher-than-expected fourth-quarter profit, boosted by tax benefits and interest income”.

Baidu.com reported net income in the fourth quarter rose to 24.5 million yuan, or $3 million, from 6.37 million yuan, the Beijing-based company said in a statement. Sales more than doubled, to 114.9 million yuan from 42.9 million yuan.

As per the information available, Baidu shares closed up $1.63 at $51.69 on Nasdaq ahead of the results but leaped to $58.40 in after-hours trading.

The company said sales in the first quarter may double from a year earlier as the company attracts more advertisers. Revenue will probably rise to between 125 million yuan (US$15.5 million) and 130 million yuan, an increase of between 174 per cent and 185 per cent from a year earlier, the company said in a statement. By the end of the fourth quarter, Baidu.com had 63,000 active online marketing customers, or advertisers, a rise of 18.6 percent from the previous quarter. The company, which listed in August 2005, did not provide comparative figures.

The company forecast quarter-on- quarter revenue will slow in the three months ending March, due to the Lunar New Year holiday in January.

Baidu chief executive Robin Li was confident the company would maintain its leading position in the mainland search engine market even as competitors such as Google and Yahoo!China beef up their operations.

“We continue to extend our lead as China’s number one search engine,” Li said. He pointed to a recent study by China market researcher iResearch, which said 66 percent of Chinese Internet users use Baidu as their preferred search engine, up from 44 percent a year ago.

“As the market leader, Baidu’s biggest competitive advantage is that we provide the best user experience in Chinese search,” chief financial officer Shawn Wang said. “Our deep understanding of the Chinese language, Chinese users needs and their search behavior are reflected in our search technology, products and features.”

“Redemption came swiftly for Baidu.com last night after a monster fourth quarter rewarded believers in China’s leading search engine. The stock shot up by 13 percent in after-hours trading when the company posted a profit of $0.09 a share -- $0.13 a stub before stock-based compensation -- on $14.2 million in revenues. It may not sound like much, but it translates into a 168 percent top-line improvement and a 286 percent surge in profitability over the year-ago quarter,” according to msnbc.msn.com. “For those valuing Baidu based on analyst projections, the company’s showing handily beat market forecasts. Analysts had called for earnings to clock in at $0.07 a share on just $13 million in revenues.”

“It’s a good result. The operating margin is higher, but the company isn't spending enough on research and development,” Piper Jaffray analyst Safa Rashtchy reportedly said. “Baidu is competing now with Google.”