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Baidu’s Search Engine Profit In China Jumps 112.4%

Chinese search engine Baidu Inc. posted a 76.4% revenue increase as the company announced its unaudited financial results for the third quarter ended September 30, 2010.

Total revenues in the third quarter of 2010 were CNY2.256 billion, a 76.4% increase from the corresponding period in 2009. Net income in the third quarter of 2010 was CNY1.047 billion, a 112.4% increase from the corresponding period in 2009.

Jennifer Li, Baidu’s chief financial officer, commented, “We are pleased to have delivered record margins in the third quarter, even as we actively invested in sales and marketing, R&D and network equipment. Looking forward, we will continue to invest aggressively to support Baidu’s long-term growth.”

Online marketing revenues for the third quarter of 2010 were CNY2.256 billion, representing a 76.5% increase from the corresponding period in 2009. Baidu had about 272,000 active online marketing customers in the third quarter of 2010, representing a 25.9% increase from the corresponding period in 2009 and a 7.1% increase from the previous quarter. Revenue per online marketing customer for the third quarter was approximately CNY8,300, a 40.7% increase from the corresponding period in 2009 and a 10.7% increase from the previous quarter.

Traffic acquisition cost as a component of cost of revenues was CNY201.7 million, representing 8.9% of total revenues, as compared to 15.3% in the corresponding period in 2009 and 9.7% in the second quarter of 2010. The sequential decrease in TAC as a percentage of total revenues reflects faster organic traffic growth during the quarter.

Operating profit was CNY1.181 billion, representing a 126.6% increase from the corresponding period in 2009. Operating profit excluding share-based compensation expenses (non-GAAP) was CNY1.206 billion, a 122.2% increase from the corresponding period in 2009.

Income tax expense was CNY165.2 million, compared to an income tax expense of CNY49.1 million in the corresponding period in 2009. The effective tax rate for the third quarter of 2010 was 13.6% as compared to 9.1% for the corresponding period in 2009 and 14.4% in the previous quarter.

As of September 30, 2010, Baidu Inc. had cash, cash equivalents and short-term investments of CNY6.938 billion. Net operating cash inflow and capital expenditures for the third quarter of 2010 were CNY1.265 billion and CNY246.3 million, respectively.

Baidu, which runs the Baidu.com website, currently expects to generate total revenues in an amount ranging from CNY2.370 billion to CNY2.440 billion for the fourth quarter of 2010, representing an 88% to 93.5% year-over-year increase.

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