Search engine maintain Chinese dominance
San Francisco, CA -- (SBWIRE) -- 11/19/2012 -- Industry leading Chinese search engine Baidu announced a third-quarter profit of nearly 60% as the search company maintained its dominance in its home country.
Although some large companies have culled advertising budget with Baidu due to the uncertain global economy, the report showed that the company was able to increase revenue from businesses located in China’s less-populous cities. Nearly all revenue generated by Baidu comes from search advertising.
In a statement, Baidu Chief Executive Officer Robin Li noted that the third-quarter results were "driven by encouraging customer growth and improvements to our monetization platform."
Beijing-based Baidu stated that the online marketing sector of the company grew nearly 50% to 6.25 billion yuan (equivalent to $1.0 billion USD), down slightly from the previous period last year, when the company registered a 60% increase in growth.
The current macroeconomic situation in China was cited by Chief Financial Officer Jennifer Li as one cause of the lesser growth. The company did report a 28% year-on-year customer increase, to 390,000, which helped drive strong revenue growth.
An expected slowdown in advertising sales following a strong summer, weak national economic growth, and competition from a Chinese-based new search engine has company analysts expecting fourth-quarter revenue of between 6.155 and 6.345 billion yuan (between $986 million and $1.02 billion USD), slightly lower than industry analysts predicted.
In August, antivirus company Qihoo 360 Technology launched its own search engine as a rival to Baidu and poses the largest competitive challenge to the already established search engine. Since its late-summer launch, Qihoo has managed to cull nearly 12% (11.6) of the search engine traffic in China as noted by research group iResearch.
Mobile browsing through devices like smartphones and tablets also presents a challenge to Baidu’s dominance. All Chinese Internet companies are struggling to make a profit from advertising on mobile devices as the smaller screens inhibit advertising space.
CEO Li said that Baidu is working to turn a profit from its mobile offerings, such as maps, search, and overall Web browsing. However, he added that it might be a couple of years "before the mobile monetization gap will close."
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