Business / Companies

Baidu finds rich profit in search revenue

By Meng Jing (China Daily) Updated: 2014-04-26 07:25

Baidu finds rich profit in search revenue
The headquarters of the Chinese search engine Baidu Inc in Beijing. [Photo/China Daily]

Baidu Inc, the nation's leading Internet search provider, said on Friday that first-quarter revenue soared 59.1 percent year-on-year to 9.5 billion yuan ($1.53 billion).

The Beijing-based company released unaudited results for the first three months of this year that show net profit expanded 24.1 percent year-on-year to 2.54 billion yuan.

The solid performance was powered by the company's core search business, said Robin Li, founder and chief executive officer of the Nasdaq-listed Baidu.

"As the Internet disrupts more and more traditional industries, and mobile's importance grows, Baidu is uniquely positioned with our competitive advantage as a leading cross-platform information gateway with world-class technology.

Baidu finds rich profit in search revenue

Baidu to be buying, doing more mobile applications
Baidu finds rich profit in search revenue
"We're confident our focused approach to investment will continue to drive sustainable growth in the quarters ahead," Li said in an earnings conference call on Friday.

According to Li, traffic for Baidu's mobile search is growing very fast and the monetization of the mobile search activity is even faster. He didn't give specific numbers, but he said that mobile search traffic is expected to surpass personal computer-based search traffic this year.

Jennifer Li, chief financial officer, said that the company will continue to invest heavily in five strategic areas: search, mobile and cloud computing, location-based services, consumer production and internationalization.

Compared with its rivals (Tencent Holdings Ltd and Alibaba Group Holding Ltd), Baidu appears to be slowing its merger and acquisition efforts after acquiring app distribution platform 91 Wireless and taking control of group-buying site last year.

But it has invested heavily in its research and development team. According to its first-quarter statement, R&D expenses surged 57.5 percent year-on-year to 1.28 billion yuan.

"The increase was primarily due to an increase in the number of research and development personnel," said Jennifer Li.

What Baidu needs most is to strengthen its leading position in search, said Hou Xiaotian, chief analyst with T. H. Capital LLC, an independent research and investment advisory firm.

"Tencent's biggest asset is its users, because the company specializes in social media and it's invested in a lot of companies to increase its users' loyalty.

"Meanwhile, Alibaba's e-commerce empire is based on merchant loyalty, so the company's merger candidates are mainly those who can bring traffic to merchants," said Hou.

Baidu's core asset has always been search, so it needs to invest to have more products to increase user stickiness on search, she added.

Baidu finds rich profit in search revenue

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