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Baidu Forecasts Sales Growth That Misses Analyst Estimates

Other News Materials 19 February 2009 08:31 (UTC +04:00)

Baidu Inc., operator of China's most- used Internet search engine, forecast sales will grow at a record-slow pace of 36 percent, missing analyst estimates, as the economic slump discourages companies from advertising, dpa reported.

First-quarter revenue may range from 780 million yuan ($114 million) to 800 million yuan, Baidu said yesterday in a statement. That missed the 805 million yuan median estimate of 10 analyst estimates compiled by Bloomberg. Fourth-quarter profit was 288.7 million yuan, or 6.8 percent lower than the median estimate.

Baidu American depositary receipts fell in after-hours trading after the company said it expects some customers to cut marketing spending. Profit rose 31 percent, the slowest pace since the company's listing in 2005, partly because the Web site stopped selling advertising to unlicensed medical centers after a state-run broadcast criticized Baidu's practice of displaying paid search results higher than some free ones.

"The company had to spend some money to really clean up what happened" after the China Central Television report, said Jeff Papp, senior analyst at Oberweis Asset Management Inc., which owns Baidu shares. "I think it's going to take a couple of quarters to really clean the system, but I think in the long-term this will only make them stronger."

Baidu's ADRs fell 2 percent to $125.49 in U.S. after-hours trading following the earnings release. The stock rose 4.7 percent to $128.09 on the Nasdaq stock market yesterday, limiting this year's drop to 1.9 percent. Baidu tumbled 67 percent in 2008.

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