Baidu Inc (ADR) (NASDAQ:BIDU) announced today will report its second quarter financial results ended June 30, 2014 after the U.S. market closes on July 24, 2014. The leading Chinese language Internet search provider will hold an earning’s conference call at 8:00 PM on July 24, 2014.
Mobile segment a cash cow for Baidu
According to Deutsche Bank analysts, second quarter will be an impressive one for the company, where the revenue is forecasted to surge 59.3% from the corresponding quarter previous year, where the revenue stood at 12 billion Yuan. Baidu posted an increase of 59.1% in the first quarter.
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Mobile segment has become a cash cow for the company as advertisers are increasingly flocking on the site for posting ad contents in the wake of rising mobile internet users. Deutsche Bank analysts Alan Hellawell III and Vivian Hao said that Mobile search ads are witnessing an increase in adoption. Additionally, the companies cost per click gap has declined. Also, the mobile search offerings from rivals have not impacted much Baidu’s own mobile search business.
Analyst cautious over operating margin
Analysts believe that estimating revenue of the company is relatively easy process compared to Baidu Inc’s operating margin. Previously, management of the company said that this year has been an investment year, which will reduce the profit, or the year could be devoid of any profit, even though top line continues to grow.
Baidu is investing and shelling out money to pay the smartphone manufacturers to pre-install the mobile apps on new phones. Analysts are pretty confident about the top line numbers, expecting Baidu to post RMB12b in the second quarter, but quarter over quarter operating margin remains gloomy. The conservative management guidance indicates that there could be a decline of 60 basis points. Also, the relative less spending on marketing and video content and better than expected results at Qunar could unlock more growth for the internet company, believe analysts.
Recently, the Chinese company made another investment to enhance its presence in the education sector in China. Baidu shelled out several million of dollars into cloud learning portal Wanxue. The Chinese web giant started to invest in the online education game few years back, and is now striving to catch up with Tencent and Alibaba for quality content.