Baidu Shares Plunge After Revenue Forecast Below Expectations
By: Reuters



Baidu shares slid more than 10 percent on Tuesday after the Chinese Internet search company forecast a second-quarter revenue range at the low end of Wall Street expectations.
The disappointing guidance raised questions about whether Baidu's [BIDU 131.91 -3.92 (-2.89%) ] business is being affected by economic conditions in China or whether company-specific issues are to blame, analysts said.  
   
"At the end of the day, people expect these companies to beat numbers. They have a track record of usually beating," said Raymond James analyst Aaron Kessler.   
   
Baidu said that revenue in the second quarter will range between $847.2 million and $867 million. The $857.1 million midpoint of the range was below the $862.8 million expected by analysts polled by Thomson Reuters I/B/E/S.

Baidu shares fell more than 10 percent in after-hours trading to $121.50 from a close on the Nasdaq of $135.83.  
   
Baidu has expanded its dominant position in China's Internet search market ever since Google [GOOG                 610.23   8.96 (+1.49%)  ] decided in 2010 to relocate its search engine to Hong Kong following a standoff with the Chinese government over Internet censorship.  
   
But its search market is increasingly encroached upon by Alibaba Group's Taobao and Sohu.com [SOHU 0.83 -0.13 (-0.26%) ] Sogou. Baidu's efforts to expand into the mobile, travel, ecommerce and online video sectors have also not seen immediate gains.   
   
Baidu CEO Robin Li said in a statement on Tuesday that the company expanded the number of its small and medium-sized business customers, despite what he said was "usually a seasonally slow quarter."

Baidu said its net income in the three months ended March 31 increased roughly 76 percent year-over-year to $299 million, or 85 cents per ADS.  
   
Revenue in the first quarter was up 75 percent at $677 million, roughly in line with analyst expectations.  
   
Baidu shares have gained more than 24.4 percent since the start of the year.
  
Baidu executives will hold a conference call to discuss the quarterly report with analysts later on Tuesday.