Baidu Inc (ADR) (BIDU) Earnings To Fall As Mobile Drive Continues?

Baidu Inc (ADR) (BIDU) Earnings To Fall As Mobile Drive Continues?

Baidu Inc (ADR) (NASDAQ:BIDU), the Beijing-based company is continuously making huge investments in marketing and mobile technology. Owing to such investment costs incurred by them, the earnings of this Chinese search leader are expected to decline in the first quarter. Baidu will report its first quarter earnings on Thursday, April 24, 2014, and as per the majority of analysts Baidu is a Buy.

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Baidu following U.S. counterparts

According to Thomson Reuters-polled analysts, the earnings per share, excluding one-time items, is expected to decline by 6% year over year 95 cents compared to $1.01 past year. This EPS decline will happen for the first time in the past four years. An increase of 61% is expected in the sales taking it up to $1.54 billion.

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Baidu Inc (ADR) (NASDAQ:BIDU) just like its U.S. search counterparts Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), Yahoo and few others is trying to increase the number of mobile users and the revenue from them. In an attempt to do so, it has been making huge investments in new marketing, research and development. This spending will also be carried by the company in the first quarter of 2014 as informed by the CFO Jennifer Li, in February.

“For 2014, while we expect revenue to accelerate, we do not expect increase in absolute profit,” Li told analysts on a conference call, in February.

Increasing the mobile presence

In the first quarter, the internet company has come up with a new marketing campaign especially for mobile users. Baidu had more than 100 million active mobile customers by the end of 2013. Of the total revenue earned by the company in the fourth quarter, 20% was generated from mobile, which was more by 10% of what it was two quarters back. Baidu Inc (ADR) (NASDAQ:BIDU)’s mobile platform captures 40% of the market share in China with a user base of 100M.

The company’s mobile distribution channel has secured the top position in China. It has a broad product portfolio comprising of various mobile products such as internet browsing, video browsing, online searching and app distribution.

Though Baidu Inc (ADR) (NASDAQ:BIDU) enjoys a dominant position in China, it needs to watch out for a rival Chinese Internet Company Qihoo 360 Technology. Presently, Baidu has a massive lead against the rival but the gap is narrowing. The core business of Qihoo is related to mobile security software, but in recent times, it had been foraying in new mobile gaming and search technology. For 2013, Baidu posted a revenues of $5.2 billion compared to only $671 million by Qihoo.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at
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