Earnings: Q4 Profits Up 31 Percent, But Growth Concerns Ahead For Baidu

This story was written by Tameka Kee.
Chinese search engine *Baidu* turned in solid Q4 results: net income rose to $42.3 million (288.7 million yuan), up 31 percent year-over-year, and revenues rose to $132.2 million (902.1 million yuan), up 58 percent. It also turned in a $153.6 million (1 billion yuan) profit for the yearup almost 67 percent from 2007. Revenue for the year came in at $468.8 million (3.2 billion yuan), up 83.3 percent from 2007.

Growth concerns: But there are some concerns moving forward, as advertisers are actually spending less with the engine: average revenue per customer came in at $674 (4,600 yuan)down 24.3 percent year-over-year and 2 percent sequentially. That's a sharp contrast from Q3, when advertisers spent 34 percent more than they did in 2007, and almost 7 percent more than in Q2.

Baidu (NSDQ: BIDU) attributed the drop in spending to the removal of unlicensed doctors and pharmacists from its roster during the quarter (there was a major scandal around the doctors' claims, per TechTraderDaily), but said a "large portion" of those customers had resumed using its services. That doesn't explain the decrease from 2007, though, and it doesn't shed any light on why Baidu's growth in advertisers overall is stalling: the engine had 197,000 active advertisers in Q4, up 27.1 percent from Q407, but up just 1.5 percent sequentially. In Q3, active advertisers had grown 36 percent year-over-year, and 7 percent sequentially.

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By Tameka Kee