Domestic

Baidu to post high growth rate for years

(China Daily)
Updated: 2009-05-04 07:49

Baidu's market share in China rose to 62.2 percent last year from 59.3 percent in 2007. [Agencies]

Baidu Inc, operator of China's most-used Internet search engine, will post a high growth rate "for years to come" as online demand surges in the world's third biggest economy, Chief Executive Officer Robin Li said.

The Chinese company plans to generate growth through its search-engine operations and won't shift focus, Li told analysts in a conference call last week. Baidu doesn't intend to follow Google Inc in offering online music, he said.

Baidu said first-quarter profit rose 24 percent as advertising sales surged after the company spent more on marketing to maintain its lead over Google in China, the world's biggest Internet market by users. The Beijing-based website's shares have gained 72 percent this year, outperforming Chinese Internet stocks including Tencent Holdings Ltd and Sina Corp.

"It's important to remember Baidu is a search company," Li said. "We don't intend to be a content provider."

Google, the world's biggest search engine, said in March it will start a free online music service in China with companies including Warner Music Group Corp and Sony Corp.

Baidu offers services that allow users to search for music files on the Internet. Advertising sales from related services account for less than 5 percent of revenue, Li said.

Opportunities in online music "have not been as strong as expected", Li said.

Baidu's market share in China rose to 62.2 percent last year from 59.3 percent in 2007, according to research company Analysys International. Google's share grew at a faster pace, to 27.8 percent from 23.4 percent, the Beijing-based researcher said.

The Chinese company's first-quarter net income rose to 181.1 million yuan ($26.5 million), or 5.22 yuan a share, from 146.6 million yuan, or 4.22 yuan, a year earlier, the Beijing-based company said in a statement. Sales jumped 41 percent to 810.7 million yuan.

First-quarter expenses for sales, marketing and administration climbed 39 percent to 204.3 million yuan from 147 million yuan a year earlier, the company said. This included about 40 million yuan spent on sponsorships during China Central Television's annual Spring Festival gala, the most-watched annual TV broadcast in the nation.

"Organic Internet user growth, government stimulus plans and Baidu's brand campaign on CCTV's Spring Festival Gala are major reasons for the upside," Zhao Ming, an analyst at Susquehanna Financial Group, wrote in an April 23 report. He has a "positive" rating on the stock.

Second-quarter sales will be 1.07 billion yuan to 1.1 billion yuan, Baidu said. That's more than the 983.6 million yuan average of 14 analysts' estimates.

China added 16.2 million Web users in the first quarter, the Xinhua News Agency reported last month, citing Xi Guohua, vice-minister of industry and information technology. The nation had 316 million Web users at the end of March, the report said. That's more than the total US population.