DOW JONES NEWSWIRES
Baidu Inc.'s (BIDU) first-quarter earnings surged 76% as the Chinese Internet search giant's revenue continued to surge.
American depositary shares were still off 10% at $122 after hours as investors took a dim view toward a top line that was merely in-line with expectations.
Baidu, which generates almost all its revenue from search advertising, has posted double-digit earnings growth over the past year on soaring ad sales. The company has solidified its market-leading position after 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.
The company has also been branching out from search advertising with its own Internet browser and offerings of games and other mobile phone content.
"We are committed to this aggressive investment strategy for the year ahead and will maintain our focus on managing operational efficiency to ensure sustainable growth," Chief Financial Officer Jennifer Li said, referring to the company's ramped up spending on network infrastructure.
Baidu posted a profit of 1.88 billion Chinese yuan ($299 million), or CNY5.38 (85 U.S. cents) per ADS, up from CNY1.07 billion, or CNY3.06 an ADS, a year earlier. Excluding stock-based compensations costs, earnings reached CNY5.48 (87 U.S. cents) per ADS. Analysts polled by Thomson Reuters were expecting 84 cents.
Revenue jumped 75% to CNY4.26 billion ($677.1 million). Baidu's guidance in February forecast a top line between CNY4.2 billion and CNY4.33 billion. Revenue was also in line with analysts' expectations.
Overhead costs climbed 44% in the latest quarter, while research and development costs grew 85% as the company hired more personnel.
Looking ahead to the current quarter, the company predicted revenue between CNY5.34 billion ($847.2 million) and CNY5.46 billion ($867 million), bracketing the average $860 million estimate from analysts polled by Thomson Reuters.
Conversion rates are based on noon buying rate in New York on March 30 as certified by the Federal Reserve Bank of New York.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com