Baidu Inc (BIDU) Q4 Earnings Preview

Baidu Inc (BIDU) Q4 Earnings Preview

Chinese Internet giant Baidu Inc (ADR) (NASDAQ:BIDU) is expected to report its fiscal fourth quarter earnings on February 5. The Beijing-based company has a 63% market share in China. For the third quarter ending September 2013, Baidu had earned $498 million in profits on revenues of $1.45 billion. That represented a meager 1.2% YoY growth in earnings and a whopping 42.3% rise in revenues. Investors were baffled with the wide difference in the growth rate of earnings and revenues.

Baidu’s full-year revenues expected to jump 42%

Baidu Inc (ADR) (NASDAQ:BIDU)’s fourth quarter results will give a clear picture of whether the search engine company’s earnings make a turnaround. An average of 13 analysts’ estimate Baidu’s Q4 earnings to jump from $1.28 in Q4, 2012 to $8.21 a share in the latest quarter. The estimates range between $7.56 and $9.01 per share. Fourth quarter revenues of the Chinese company are expected to jump to $9.23 billion. For the full year 2013, analysts expect Baidu’s revenues to jump 41.70% from the previous year to $31.60 billion. Its full year earnings are expected to rise slightly from $29.83 to $30.45 per share.

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Baidu spending heavily on mobile

Baidu Inc (ADR) (NASDAQ:BIDU) has made several strategic acquisitions to maintain its exponential growth rate. It acquired the online video business of PPS for $370 million. The purchase will add to the Chinese search engine giant’s mobile initiative. Baidu also bought 91 Wireless for $1.9 billion to challenge its key rival Qihoo 360 Technology Co Ltd (NYSE:QIHU) in the mobile business. Some analysts argued that Baidu overpaid for 91 Wireless because the target company had only $50 million in revenues. But it shows how much Baidu is committed to maintaining its growth rate as 91 Wireless recorded a 300% revenue growth last year.

American shares of Baidu Inc (ADR) (NASDAQ:BIDU) surged 3.52% to close Tuesday’s session at $155.82. The stock has returned a whopping 44% over the past 12 months. Baidu expects its revenues to grow at about 50% annual rate over the next few years due to heavy investments in mobile. Credit Suisse has an Outperform rating on the stock.

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