Baidu profit soars 70 percent on increased ad customers

Revenue reached the higher end of the company's projections, growing by 59.8 percent

Baidu, China's largest search engine, reported second-quarter profits that were up 70 percent from a year earlier as it continued to add new customers for its online marketing services.

Baidu's profits for the quarter ended June 30 reached 2.77 billion yuan (US$440 million), up from 1.63 billion yuan in the same period last year. Revenue hit the higher end of its forecast, growing by 60 percent year over year to 5.46 billion yuan.

Baidu controls 78.6 percent of the Internet search revenue in China, according to Beijing-based Analysys International. Google is in a distant second place with 15.7 percent, its presence in China having diminished after it decided on a partial retreat from the country because of its concerns over online censorship and hacking.

Nearly all of Baidu's revenue comes from online marketing, for which it says it had 352,000 active customers in the quarter just ended. It will roll out new marketing tools for its advertising customers to help it maintain its steady growth, CEO Robin Li said in a statement.

Baidu rose to become a Chinese Internet giant through searches coming from desktop computers. But in recent quarters, the company has seen search traffic from mobile devices "skyrocket", said Li during a Tuesday earnings call, although he declined to offer specific numbers.

The company has pre-installed a Baidu search box in all major mobile phone brands in the country, Li added, while also pre-installing other company apps. A small percentage of the revenue generated from the pre-installed Baidu software is shared with the partnering handset providers.

China now has 538 million Internet users, with about 388 million connecting via their mobile phones, according to a report last week from the China Internet Networking Information Center.

For the quarter under way, Baidu expects its revenue to increase by 49.6 percent to 53.5 percent year over year.

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Copyright © 2012 IDG Communications, Inc.

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