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2 Years : From Dec 2011 to Dec 2013
TAIPEI (Dow Jones)--Baidu Inc. (BIDU) said Friday its fourth-quarter net profit surged 77% from a year earlier as the Chinese Internet search giant brought in more revenue from its growing base of advertisers.
The Chinese Internet search giant also forecast revenue to grow by up to 77.7% in the first quarter in a sign that business conditions remain favorable, and vowed to begin work monetizing rapidly growing mobile search traffic.
In a conference call with investors, Baidu Chief Executive Robin Li said profits were driven by a growing number of customers and the willingness of those customers to allocate more funds to online advertising, pointing out that many companies that traditionally advertise offline are increasingly turning to Baidu to grow their brands.
He said the company would continue to explore long-term international opportunities and is seeking to begin monetizing mobile search traffic.
"Mobile will represent an ever larger percentage of our local traffic. In the past, we basically did not spend any resources on monetizing 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," he said.
Baidu, which makes most of its revenue from search advertising, has solidified its market lead since U.S.-based rival Google Inc. (GOOG) shifted its local search traffic to Hong Kong in 2010, following a disagreement with Chinese officials over online censorship.
Net profit for the three-months ended Dec. 31 rose to 2.05 billion Chinese yuan ($326.3 million) from CNY1.16 billion a year earlier, while revenue rose 83% to CNY4.47 billion from CNY2.45 billion. Both net profit and revenue were slightly above analyst expectations.
The company also said it expects revenue for its current first quarter to grow 72.2% to 77.7% to between CNY4.2 billion ($666.5 million) and CNY4.33 billion, in line with expectations.
The Beijing-based company said its number of online marketing customers, or companies buying ad placement beside related search results, rose 13% compared to a year earlier. Revenue per online marketing customer grew 62%.
Li estimated the Chinese Internet company currently has 513 million users and Baidu expects to capture the overwhelming majority of new user growth.
In light of the stable growth in search traffic, Baidu has been aggressively expanding its product offerings with investments in travel website Qunar.com Information Technology Co., online video, e-commerce, social networking and its own smartphone software for Chinese users.
Currently Baidu services are featured on 80% of branded mobile handsets in China, he said, adding that the company would focus on mobile products and monetizing mobile search to keep pace with the "astonishing growth" in the Chinese mobile sector.
"Probably over the next three to five years, our resources and emphasis on mobile will continue to be on the user front instead of on the monetization mechanisms," he said.
Chief Financial Officer Jennifer Li said the company expects bandwidth and depreciation costs to continue to rise as it expands infrastructure and adds servers.
For the full fiscal year, research and development expenses rose 85.8% from the prior period and 2011 capital expenditures totaled CNY1.8 billion.
Li said the company, which added 5,200 staff in 2011, would continue to hire, focusing specifically on research and development.
Baidu's U.S.-traded shares rose more than 2% to $144.85 after hours. The shares had closed the regular session at $141.83, up nearly 22% in the year to date.
-By Paul Mozur, Dow Jones Newswires; 8862-2502-2557; firstname.lastname@example.org