Baidu Inc (ADR) (NASDAQ:BIDU) released its earnings report for the three months ending March 31 this afternoon after the market closed in New York. The company showed earnings per share of $1.24 for the quarter, which the company records as its first of 2014. Revenue for the three month period came in at $1.52 billion. Shares in the Chinese internet giant trended up on Monday’s market and finished the day at $159.74.
In the run up to the release of the company’s report, analysts following Baidu Inc (ADR) (NASDAQ:BIDU) said they expected the firm to report earnings per share of $1.03 on revenue totalling $1.5 billion. In the same three months of 2013 Baidu managed to bring in $1 per share on revenue of $961 million.
Baidu battles mobile problems
Baidu Inc (ADR) (NASDAQ:BIDU) is, like the rest of the computer industry, having trouble with the transition to mobile. The company is investing heavily in its mobile experience as more and more of the Chinese populace move towards a mobile-focused internet. That change is slowing down businesses around the world, and Baidu is no exception.
Baidu is doing less well than some of its competitors in the change to mobile, and the firm’s results and the performance of its shares are showing the strain. The company is still a favorite for those looking for emerging internet exposure, but some investors are losing confidence in the company, and that may be the theme going forward.
Investors lose faith in Baidu
In the opening month of 2014 Baidu Inc (ADR) (NASDAQ:BIDU) lost more than 10% of its value. The company’s multiple is high, and its value is being questioned as money is pulled out of momentum plays and the hype in the Chinese internet sector sets itself on Alibaba as that company heads for IPO. The company’s mobile troubles have contributed to the problem, and shareholders backing the company are still betting on a lot of growth in the coming years.
Baidu Inc (ADR) (NASDAQ:BIDU) is still valued to grow, and the company’s future is bright according to the multiple the market affords it. There is a lot of work for management to do before shareholders are as confident in the future of Baidu as they were at the end of 2013. The company’s performance in recent years has not been consistent, nor has it been guaranteed.
Baidu is a Chinese company, it operated on the web, and it’s a momentum play. All three of these areas are vulnerable to adverse headline pressure. The opening months of 2014 have seen a lot of that pressure come into play, and there is no accounting for the future moods of the market. Baidu Inc (ADR) (NASDAQ:BIDU) needs to build its fundamentals to avoid the worst effects of those pressures, and this evening’s earnings report may be a step in that direction.