Saturday, October 08, 2005

Baidu's Good Quarter

Baidu annouced that they will report earnings on Oct. 26 for the quarter ended Sept.30.

Webcast ImageWebcast
Q3 2005 Baidu Financial Results Conference Call (Live)
10/26/05 at 8:00 p.m. ET

We expect Baidu to report another huge quarter. Baidu has estimated
earlier of revenue of about $10 million or 19% quarter over quarter growth.

Considering the fact that this is the first quarterly report since Baidu has gone public and the conservative nature of Chinese, that estimate will proved to be too low.

The quarter should come in around $11 million or 30% quarter over quarter growth with earnings of about 7 to 8 cents.

Two events likely have boosted this quarter's performance. One is the buzz surrounding Baidu's IPO and the other is the new Baidu's map service.

During the last week of Sept., Baidu released its maps beta in time for the week-long national day holidays, and was found to be easier to use than the service. The result was a huge surge in Baidu's search volume mostly centered around tourist information. Tourist category has been found to have very high clickthrough rates and expensive keywords in the past.

The fast growing economy of China has dramatically boosted consumer spending that in turn has attracted increased investment of multinational consumer conglomerates around the world. We have seen increased advertisement from them on Baidu.

News reported that Chinese spent $33 billion dollars during the "Golden Week". Even the small town Macao saw 1.8 million visitors from mainland China.

On the other fronts, Baidu's bulletin board service continue to see good volumes. The service has vastly outperformed Google's similar service called "Google Groups" in the US in relative terms. Many analysts are seeing good expectations on this kind of "sticky" community related services. Google and Yahoo both have acquired companies
providing similar service recently.

Another new service is showing it's huge growth potential and is like a powerful magnet for many net surfers. The new service is called "Baidu Knows The Answer". It is effectively a similar show like "Wheel of Fortune" and "Jeopardy". When a user cannot find a good answer to a question, he or she simply post the question on the service. Any user can then post an answer to that question. The answers can then be rated by other users.

We have seen a swarm of users coming in on almost every question with quick and mostly very high quality answers. We expect this service will outperform similar services such as We think it is a huge hidden jewel in Baidu.

Past this quarter, next two quarters will be huge quarters to follow for Baidu. Both quarters flanks the relatively higher economic activities around the Chinese Spring Festival.



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