The sky isn’t falling at Baidu.com, Inc. (NASDAQ:BIDU) , but it’s also not as blue as it used to be.
China’s leading search engine posted ho-hum quarterly results on Monday after the market close. Revenue soared 42% to $1.02 billion, and that’s just ahead of the $1.01 billion that Wall Street was targeting.
The good news begins to deteriorate after that.
Expenses across most of the vital categories — bandwidth, content, SG&A, R&D — all grew faster than revenue. The end result is that operating profit climbed just 24% during the quarter. Net income did manage to surge 36% to $1.28 a share. That may be in line with analyst expectations, but that figure was padded by a one-time gain related to its step acquisition of video-streaming website iQiyi.
Don’t expect that to be the last Baidu acquisition. The company has $5.2 billion in cash and marketable securities at a time when it helps to diversify.
Its guidance for the current quarter is disappointing, though it could’ve been worse. The dot-com giant is forecasting $945.4 million to $975.9 million in revenue. Yes, that’s a 4% to 7% decline sequentially, but earlier in the day Sohu.com Inc. (NASDAQ:SOHU) announced that its Sogou search platform would be posting a 12% to 17% sequential decline on the top line.
Analysts were braced for the seasonal dip, but the midpoint of Baidu’s range is below the $967.1 million that Wall Street was modeling.
Baidu survived — and that’s certainly commendable in this kind of climate — but the stock needs the company to thrive if it wants to resume its winning ways.
