Baidu posts strong second quarter results

Chinese search engine Baidu announced increased revenue and profit for the quarter ending June 30 of this year, the company said Thursday.

Net income was 58.5 million renminbi ($7.3 million as of June 30, the last day of the period being reported), which is equivalent to earnings of $0.22 per share. That figure was over 385 percent higher than the same period in 2005, the company said.

Total revenue for the quarter was 191.6 million renminbi. Those revenues increased by 174.9 percent year-on-year, and came in at the high end of analysts’ expectations for Baidu.

Chief Executive Officer Robin Li said that 99 percent of the company’s revenue came from online advertising, in a live Webcast of Baidu’s earnings conference call. Of that, a majority of its sales come from third-party distributors, although Chief Financial Officer Shawn Wang said that Baidu was moving towards strengthening its direct sales staff and bringing most of its sales in-house.

Baidu had total operating expenses of 133.64 million renminbi, up 285.3 percent year-on year. Wang attributed this in part to an increase in research and development spending, and in the company’s expanded hiring for its direct sales force. The company added 500 to 600 new staff during the quarter, Li said, bringing total headcount to about 2300.

For the third quarter of 2006, Baidu expects total revenues of 238 million renminbi to 246 million renminbi.