Yahoo Finance Baidu Stock Dives On Weak Revenue Outlook
Baidu late Monday reported mixed Q2 results and gave weak revenue guidance, sending the China search giant's stock tumbling in after-hours action.
Revenue rose 38% to $2.67 billion, snapping a four-quarter string of decelerating growth. Analysts polled by Thomson Reuters had $2.66 billion.
Baidu's (BIDU) reported earnings per U.S. share was $1.64, up from $1.63 a year earlier but apparently missing analyst estimates for $1.71. EPS excluding share compensation rose $1.81, up 5%.
The search giant sees Q3 revenue of $2.93 billion to $2.99 billion. Analysts expected $3.02 billion. Baidu didn't give Q3 profit guidance.
Baidu shares dived nearly 9% in after-hours trading to 180.72.
Baidu had finished the regular session off 4% to 197.68 — 21% off its Nov. 13 peak of 251.99. The stock hit a 52-week low of 178.81 on July 8.
Baidu and other U.S.-listed China stocks including Alibaba Group (BABA) fell hard on Monday as China's stock markets suffered their biggest single-day fall since 2007. That came amid fears about government support for volatile Chinese equities as well as broader concerns about the world's No. 2 economy.
Mobile search monthly active users reached 629 million in June, up 24% vs. a year earlier. Monthly users of mobile maps, key to Baidu's bid on location services, saw a 48% gain.
But Baidu had warned that rising competition and its increasing focus on less-lucrative mobile users would pressure earnings.
Spending Spree
To boost growth, Baidu is spending heavily, notably on online-to-offline services. In Q2, research and development costs spiked 56% to $437.5 million, mostly from hiring more R&D staff. Selling, general and administration expenses shot up 81% to $627.4 million, fueled by its O2O efforts.
While Baidu "delivered a strong June quarter," the "soft 3Q top-line guidance is disappointing," wrote Henry Guo, a China Internet analyst with W.R. Hambrecht + Co./Summit Research in a research note after the earnings release.
Guo said he had expected the video streaming unit iQiyi and group buying business Nuomi to "help the company guide 3Q 2015 above street expectations.
Pacific Crest analyst Cheng Cheng wrote in a Thursday report that he expected iQiyi revenue to rise 69% to $697 million this year, while Baidu's online travel unit, Qunar Cayman Islands (QUNR) would post revenue of $563 million, up 98%.
Baidu CFO Jennifer Li in a statement said that "going forward," the company will reveal the "financial impact" of its online-to-offline efforts and iQiyi.
Gross merchandise value from O2O services rose 109% to $6.5 billion in the June quarter.
Li credited Baidu's core search business with "exhibiting strong growth and attractive profitability." But she stressed that the company will "continue to invest decisively.
Search Rivals
Baidu's rivals in mobile search include Alibaba and its No. 2 Shenma search unit, which hold about 25% of the mobile market. In overall search in China, Baidu vies with No. 2 Qihoo 360 Technology (QIHU), which has struggled to shift to mobile.
Sohu (SOHU) search engine Sogou is No. 3. Tencent Holdings (TCEHY), the third of the Baidu-Alibaba-Tencent (BAT) Chinese Internet giants, owns a big stake in Sohu's Sogou.
