Baidu's Q1 revenues, profit surge after Google exit
29 Apr 2010
Baidu Inc, the internet search leader in China has profited from the exit of Google from the country as its net profit more than doubled in the first quarter on increased market as well as a jump in advertising customer numbers. The Chinese web giant also gained from its new advertising system.
Baidu's first-quarter (January-March 2010) revenues were $189.6 million, a 59.6 per cent increase from the same period last year, while operating profit was $77.8 million, a whopping 167.4 per cent increase from the corresponding period.
With the announcement of the result, Baidu's American Depositary Shares soared by 14 per cent to $710 in after-hours trading yesterday from the close of regular trading of $621.38.
As expected, Baidu's revenue and market share got a big boost after internet giant Google closed its mainland-based search engine and moved to the Chinese territory of Hong Kong last month to avoid Beijing's demands of censoring search results. (See: Google seen exiting China as talks deadlock)
Mountain View, California-based Google decided to exit China after being a target of cyber attacks originating from China and as it did not want to comply with the Chinese government's policy of censoring search results. Google sticked to its views on the bad effects of unbridled censoring.
But Beijing-based Baidu did not acknowledge that its revenues and market share rose to a record high due to Google's exit, since the Internet giant held approximately 36 per cent of the internet search market share in China as of last month.
According to Beijing-based research firm Analysis International, Baidu managed to add more than 64 per cent of China's search market in the first quarter, up from 58.4 in the last quarter of 2009, while its rival Google, now operating from Hong Kong, fell to 31 per cent from 35.6 per cent.
Robin Li, Baidu's chairman and chief executive officer said that the company saw marginal benefit from the semi-exit of Google and Baidu's strong performance was largely driven by its own execution and not due to the change in the competitive landscape.
