Baidu Floats Past Targets (BIDU)

Chinese online search leader Baidu, Inc. (NASDAQ: BIDU) has reported its quarterly earnings.  Its earnings came in at $0.76 net EPS and posted $0.86 non-GAAP EPS on $118.6 million in revenue versus estimates from Thomson Reuters of $0.76 in non-GAAP EPS and $115.95 million in revenue.

The company also sees revenues at $157 to $161 million in Q2 revenues vs $145.9 million in revenues.  The CEO noted that the company sees tremendous opportunity to reinforce to customers about the inherent advantages of the pay-for-performance platform, and it is confident in its ability to continue growing. It is that pay-for-performance part of its business which is part of the scandal that hurt the company in recent months.  But the recent rally and stability has allowed it to rise from lows by more than 100%.

The company also noted that its balanced approach to controlling costs allowed Baidu to maintain healthy margins, and it plans to invest in user experience, monetization, operating efficiency and branding.

Baidu ended the quarter with about $405.5 million in cash and short-term equivalents.  Shares closed up 3% at $224.86 and we see the initial response is that shares are down less than 1% from the closing price in after-hours trading.  The 52-week trading range is $100.5o to $382.90; and the market cap at the close was north of $7.7 billion.

We would note that Baidu has now exceeded many of its price targets from analysts, and the current market cap of today values the stock at more than 12-times forward revenues for 2009.

JON C. OGG