Now that the stateside search engines have reported their quarterlyresults, let's get some serious growth going by taking a look at Chinese leader Baidu
Once again, Baidu came through with a monster quarter. Revenue soared 108% higher to $81.9 million. Earnings climbed 72% higher to $0.60 a share, but they would have been $0.67 a share if you back out stock-based compensation, or $0.79 a share if you also back out the $0.12 a share the company lost in its fledgling Japanese search engine operations. Wall Street was only looking for a profit of $0.61 a share on $75.4 million in revenue.
With China's Web traffic growth likely to accelerate heading into this summer's Olympic Games in Beijing, Baidu is in the driver's seat for more of that high-octane speed that growth investors crave.
The report bodes well for Sohu.com
Analysts have been chasing Baidu ever since it went public. They're not going to catch up now. The company's second-quarter guidance calls for revenue to nearly double to $111 million to $114 million. Analysts were perched on the $100.6 million mark, so expect Wall Street's targets to climb higher in the coming weeks.
Chinese stocks have been creeping back into favor lately, with Baidu leading the way. Its shares have bolted some 70% higher since bottoming out last month. The quick gains had me worried heading into last night's report, but Baidu delivered the one-two punch of past and future production it needed to justify its buoyant ways.
Baidu's stock may not seem cheap, trading at 55 times next year's projected profitability. If you want cheap cyberspace plays in China, you may want to look toward another sector. Chinese online gaming companies like NetEase
However, as the undisputed search engine market leader in China, Baidu is sitting pretty as China's citizenry grows both wealthy and Web-savvy. You pay a premium for that kind of exposure, and Baidu is certainly earning that premium.
Search through this Foolishness:
