Baidu.com Inc. (NASDAQ: BIDU) has posted earnings after the close which were not very indicative of problems inside the company. In dollar-adjusted terms, the company posted and operating profit of $54.2 million and earnings of $1.47 EPS net and $1.54 non-GAAP EPS. Revenue gained 85% to $135.4 million. First Call had non-GAAP EPS at $1.28 and revenues at $134.72 million. Unfortunately, there is a lot more to consider than just its earnings.
There was a 7.2% sequential gain in active online marketingcustomers to more than 194,000. The issue is that its huge growth may havebeen artificially helped by the Beijing Olympics.
Its traffic acquisition costs as a component of cost of revenues were$16.0 million, or 11.8% of total revenues, compared with 11.9% in thesame period in 2007.
Baidu has also given us guidance for the quarter ahead of $151 million to $155million for Q4-2008 for annual growth rates of 80% to 85% andsequential growth rates of 12% to 15%. First Call has estimates at$151.45 million in revenues.
With shares so far off of highs you’d think that this would be a goodenough report. But the problem is that we are in the beginning stagesof what may end up being a long slow global recession and a bear marketwhich has not shown any signs of losing any teeth or claws. This oneclosed up 0.17% at $249.09 in regular trading today, but shares aredown 3% at $241.60 in after-hours trading. Its 52-week trading range is $198.00 to $429.19.
Its market cap at the close was $8.53 billion, so using today’s revenueprojections and the mid-point for next quarters revenues would yieldtotal revenues for 2008 of roughly $481 million in revenues. Tradingat more than 17-times revenues is just a tough sell in a globalrecession and a bear market, even if this is called the "Google ofChina" by traders. And growth of 3% or even 9% in China feels like a recession.
Google trades at roughly 7-times 2008 revenues andthe U.S. is considered a far more stable situation right now.
Jon C. Ogg
October 22, 2008
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
