Blazing Baidu Is on Fire

Baidu has another strong quarter.

Rick Munarriz
Rick Munarriz
Oct 22, 2010 at 12:00AM
Other

If you thought that Google's (Nasdaq: GOOG) growth was something special last week, pack your bags and bounce on over to Beijing.

Baidu (Nasdaq: BIDU) delivered another monster quarter last night. Revenue soared 86% to $337.2 million, with earnings more than doubling to $0.45 a share. Analysts were settling for a profit of $0.41 a share on $333.3 million in revenue.

Don't be surprised. China's leading search engine routinely lands ahead of the pros.

 

EPS estimate

EPS actual

Q3 2010

$0.41

$0.45

Q2 2010

$0.31

$0.35

Q1 2010

$0.15

$0.20

Q4 2009

$0.17

$0.18

Source: Yahoo! Finance.

There are now 272,000 advertisers on Baidu's growing Rolodex, 26% ahead of where its sponsor count was a year ago. See how revenue is growing substantially faster than the number of advertisers? The average marketer is spending a lot more to smoke out leads through Baidu.

The move validates Baidu's engine, but advertising growth in general is booming in China -- if you know where to look.

Baidu is the first of China's new wave of marketing outlets that will be reporting quarterly results in the coming weeks. Don't hold out hope for similar speedsters.

AirMedia (Nasdaq: AMCN), an advertiser in most of China's leading airports, is looking at a 61% year-over-year spurt in revenue. Other companies won't be as fortunate:

  • VisionChina (Nasdaq: VISN), with its network of multimedia monitors on bus, train, and subway systems, is believed to be heading toward a 27% top-line spurt. However, like AirMedia, it's also projected to post a small quarterly deficit.
  • New-media darling SINA (Nasdaq: SINA) is only expected to grow its top line by 7%.
  • Focus Media (Nasdaq: FMCN), a leader in billboards, elevator posters, and video monitors in high-traffic areas, is actually pegged to post a 14% decline in revenue.

Yes, shares of Baidu are expensive, but there's nothing even in China like it.


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Things may be getting even better, too. Baidu's guidance for the current quarter calls for an 88% to 94% surge in revenue. Yes, even after the third quarter's meaty 76% push, there's room for accelerating growth.

Baidu isn't cheap, but it probably never will be, given its healthy growth trajectory.

Do you think Baidu is a good buy at this point? Share your thoughts in the comment box below.