Baidu (NASDAQ: BIDU ) shares dropped 8.5% before the market opened Friday after missing first quarter revenue and earnings estimates.
While Baidu increased its revenues 40% over the same time last period, sales only amounted to $961 million -- $8 million less than the analyst estimates of $969 million. Earnings per share also fell behind analyst estimates. Instead of taking in $1.03 per share, the company saw $0.95 earnings per share.
Altogether, total net income was $329 million, resulting in a net margin of 34%. Expenses that may caused the company to miss its net income are selling, general, and administrative expenses, and research and development costs. Compared to the same time in 2012, SG&A expenses rose 77%, to $136.6 million. Meanwhile, R&D costs increased 83%, to $131 million.
In the company's press release, Baidu did not mention specific reasons as to why revenues or earnings dipped. Instead, the executives tried to get investors focused on the long term.
CEO, chairman, and co-founder Robin Li said that investments into Baidu's mobile ecosystem are still making progress. So far, they've seen over 100 million daily active users on its mobile search product -- an increase of moe than 25% from last quarter. He also said: "Our focus will remain on tightly integrating our leading search core with valuable vertical products in areas such as travel, e-commerce and location based services to bring users the information they want as quickly as possible on both desktop and mobile devices."