Baidu Beats Bears Badly

China's leading search engine is pressing down on the accelerator. Baidu (NASDAQ: BIDU  ) posted strong top-line growth in last night's quarterly report. Revenue climbed 50% to a better-than-expected $1.573 billion. 

Profitability wasn't as kind -- clocking in essentially flat -- but investors were bracing for that given the dot-com darling's diversification into mobile, online video, location-based services, and other areas that are in developmental stages. 

Analysts can't seem to agree on how to read the report. Stifel Nicolaus upgraded the stock from hold to buy, but Morgan Stanley went the other way in downgrading Baidu from overweight to equal weight.

It's clear what's going on at Baidu. It's using the money tree that search has become to bear fruit in other areas. Does that sound a lot like the global search giant closer to home? It should. Baidu hasn't been shy about ripping pages out of Google's (NASDAQ: GOOGL  ) playbook. It's not a bad approach, especially given Baidu's dominance in the world's most populous nation. Google's revenue climbed 17% during the same three months that Baidu's top line grew three times faster. Yandex (NASDAQ: YNDX  ) -- Russia's leading search provider and a growing force in Eastern Europe -- also isn't growing faster than Baidu. It posted 37% in revenue growth during the same quarter last week.

Baidu knows what it's doing. It has spent the past year and change on a dot-com shopping spree, and that's not going to stop. The speedster closed out the year with more than $6.3 billion burning a hole in its balance sheet's pocket.

Search continues to treat Baidu well. It may have only increased its active advertisers by 11% over the past year, but the average marketer is now spending 35% more. Baidu is also no longer the company that critics feel will be swallowed by the gradual fade of the PC. Mobile now makes up a fifth of Baidu's revenue, and you can be sure that future acquisitions and organic offerings will emphasize the growing number of Chinese people that engage online primarily through smartphones and tablets.

The investments in nascent mobile niches won't play well for investors holding out for earnings growth. Many of Baidu's deals won't pay off for years. However, Baidu has become a surprising top-line growth story. Revenue growth has been accelerating through 2013, and 2014 is off to the same footrace. Baidu's guidance calls for revenue to grow by 55% to nearly 60% during the current quarter, naturally blowing past market expectations.

No one's going to pull it over for speeding.

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