Baidu Pummeled Following Low Forecast

    October 27, 2009

Baidu shared its third quarter earnings report last night, and the part that actually concerned the third quarter was quite positive – the Chinese search giant reported higher revenues and profits than most experts expected.  Unfortunately for the company, its forecast for the fourth quarter then caused what can only be described as panic.

We’ll start with the good news, at least.  Revenue rose 39 percent year over year, reaching $187.3 million.  And Baidu’s earnings per share numbers blew forecasts out of the water, coming in at $2.16 instead of $1.83.

It’s the implementation of a new online marketing system called Phoenix Nest that is due to cause problems.  When the Online Marketing Classic Edition is discontinued, Baidu expects a "temporary negative impact," and believes that fourth-quarter revenue will wind up totaling between $174 million and $180 million.

Analysts were counting on something like $203 million.  That’s a big difference, and competitors like Google will no doubt try to ensure Baidu never makes up the loss.

So Baidu’s shares are taking a beating on the stock market today; in fact, they’re down 12.79 percent at the moment.  Google’s shares, meanwhile, have just dipped 1.43 percent.

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