Baidu, China’s largest online search company by revenues, on Friday produced further evidence of its rapid growth following Google’s partial exit from the market, unveiling a 76.9 per cent jump in net profit for the fourth quarter.
The group said it was benefiting not only from a growing number of advertising customers but also from an increasing shift of advertising from traditional to online media.
Net profit hit Rmb2.054bn ($326.3m) in the quarter, while revenue rose 82.5 per cent year-on-year to Rmb4.474bn. The company said it expects revenue to rise by between 72 and 78 per cent in the current quarter.
Although the guidance was slightly more conservative than some analysts’ expectations, it reflects strong confidence in spite of the risk that a slowing economy could cool advertising demand. Asked about the company’s outlook for the online advertising climate, Jennifer Li, chief financial officer, told investors that Baidu would “not read too much into the macroeconomic situation”.
The market leader has become even more dominant since Google moved its Chinese web search from its mainland China site to Hong Kong in 2010 after a standoff with the Chinese government over hacking and censorship.
Baidu plans to start generating revenues from its mobile search business this year. “Mobile will represent an ever larger percentage of our local traffic,” said Robin Li, chief executive. “In the past, we basically did not spend any resources on monetising the mobile traffic but, starting from this year, we will do something to figure out how to better serve our customers on the mobile platform.”
Mr Li added, however, that Baidu would continue to prioritise gaining mobile market share over maximising profit.
Last year, Baidu followed a number of other Chinese technology companies in introducing its own mobile operating system. The company estimates that its services are available on 80 per cent of branded mobile phones in China.
Already the world’s largest handset market, China has seen explosive growth in smartphone adoption and the migration of key internet services such as microblogs, games and e-commerce applications to mobile devices.
Baidu’s latest earnings growth, although faster than that of many other internet companies, marks a slowdown from a year earlier. In the fourth quarter of 2010, the company’s net profit had jumped by 171 per cent. The change is mainly driven by rising investments in research and development and growing bandwidth cost.
For the full year, net income rose 88 per cent to Rmb5.539bn on revenues of Rmb14.501bn.
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