Baidu Inc. said it plans to raise its capital spending to upgrade technology, as the owner of China’s most-used search-engine widened its lead over Google Inc., helping the company post earnings that beat analysts’ estimates. “The step-up will continue, and we will be more aggressive in the near term,” Chief Financial Officer Jennifer Li said today in a conference call. Baidu is at an “early stage” of its capital spending program, she said. Baidu is offering new services including Internet shopping and an online applications site, where users can download content such as electronic books, after increasing its share of the Chinese search-engine market. The Beijing-based company has gained users from Google in China this year after the U.S. rival closed its local site to avoid online censorship rules.
Third-quarter net income more than doubled to 1.05 billion yuan ($156.4 million), or 3 yuan per American depositary receipt, compared with 492.9 million yuan, or 1.41 yuan, a year earlier. That exceeded the 959 million yuan average of 11 analysts’ estimates compiled by Bloomberg. Sales increased 76 percent to 2.26 billion yuan. Baidu ADRs rose to $103.50 on their first day of trading in Singapore, compared with their closing price of $102.48 on the Nasdaq Stock Market trading yesterday. The stock has more than doubled this year, outperforming online rivals in China including Tencent Holdings Ltd., the country’s biggest Internet company by market value, and Alibaba.com Ltd., the leading local e-commerce operator.
Capital spending rose to 246.3 million yuan in the third quarter, from 181.6 million yuan in the previous three months. The company will continue to hire sales people and engineers, after the company’s headcount increased by about 1,000 in the third quarter, bringing the total to about 10,000 as of the end of September. Revenue is expected to rise to 2.37 billion yuan to 2.44 billion yuan in the fourth quarter, Baidu said. That exceeds the 2.34 billion yuan average of analysts’ estimates compiled by Bloomberg. Source: Bloomberg