The Cautious Euphoria in Baidu Earnings (BIDU)

We had said in our detailed preview that this was a make or break quarter for Baidu Inc. (NASDAQ: BIDU).  So far it looks like the investment community is taking it as a ‘make it’ quarter.  The leader of online search in China posted earnings of $1.80 non-GAAP EPS and $184.7 million in revenue versus Thomson Reuters estimates of $1.68 EPS and $180.02 million in revenues.  The company gave guidance for next quarter of $176 million to $181 million in revenues, while Thomson Reuters estimates were $170.23 million.  The more important data is in the breakdown of the numbers, as well as what the price means if it stays this high in price.

The Chinese search giant ended the last quarter with $671.1 million in cash and cash equivalents.  Traffic acquisition cost was 16.0% of total revenues versus 14.6% a year earlier and versus 15.3% in the earlier sequential quarter.

Online marketing revenues were $184.6 million, a gain of 39.8% from a year earlier; the company had about 223,000 active online marketing customers, up about 13.2% from a year earlier and a 3.2% increase from the previous quarter.

Baidu had a mysterious drop at the end of the trading day and shares closed down 1.85% at $435.01.  In the after-hours session we have shares trading up 9% at $471.84.  We’ll have to double-check this, but anything above $470.25 looks like an all-time high.  Until the data is heard from the conference call where the company can forecast its win from the Google-China fight, we’d consider this one unfinished business.

JON C. OGG