Baidu gains on Google in crucial China market

By : |October 22, 2010 0

SAN FRANCISCO, USA: Baidu Inc’s results and revenue forecast beat quarterly expectations after the company increased its Web traffic and customers at the expense of rival Google Inc, which is pulling out of the world’s largest Internet market.

Baidu, which has grabbed market share from Google since the latter’s high-profile falling-out with Beijing this year, commands more than 70 per cent of China’s search market and is aggressively seeking other revenue streams by diversifying into e-commerce and online video.

Analysts also credited the stabilization of Baidu’s advertising keyword system for the uptick in paid click volumes and increased customers.

                                 

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While Baidu, whose name comes from an ancient Song dynasty poem, has made market gains, it faces more competition. This month, Taobao, a unit of Alibaba Group, China’s largest e-commerce company, launched search engine Etao.

China is the world’s largest Internet market with 420 million Web surfers. In the third quarter, its search market grew 59 percent to 3.13 billion yuan ($471 million). Baidu had 72.9 percent of the market, while Google had 24.6 percent, said technology research firm iResearch.

Baidu expects revenue for the fourth quarter of between $354.2 million and $364.7 million, ahead of the average analyst forecast of $348.5 million.

Third-quarter net income rose to $156.4 million, or 45 cents a share, from $72.2 million, or $2.07 per share, a year ago, before a 10-for-1 stock split. Analysts were expecting earnings of 41 cents per share.

Revenue surged to $337.2 million from $187.3 million a year ago. Analysts, on average, had expected revenue of $333.3 million, according to Thomson Reuters I/B/E/S.

Baidu shares rose to $104.09 in after-hours trading following the results, building on a 2.5 percent gain during Thursday’s regular session. The share price has more than doubled since Google’s troubles in China began in January

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