Baidu results by in the cost and channel drag down 6% less than expected

baidu today released as of March 31, 2013 in the first quarter results. Results showed that in the first quarter of 2013, baidu’s total revenue reached 5.969 billion yuan ($961 million), up 40%; Net profit of 2.043 billion yuan ($328.9 million), up 8.5% from a year earlier. Notable is, baidu in technology research and development in the first quarter of the total investment is RMB 811 million yuan, increased by 82.9% over the same period last year than in 2012, further speed up the layout of the mobile Internet.

baidu performance wasn’t up to the Wall Street analysts’ expectations in the first quarter (American depository receipts diluted earnings per share of $0.95, less than $1.03) of the Thomson Reuters analysts expect, baidu is largely due to the company to integrate the video network department in the entire quarter reports. Analysts believe that due to high cost impact in the field of network video, in the near term is difficult to profit; In addition, due to the pressures of competition in the search field, baidu also need to pay more traffic acquisition costs.

in the nasdaq stock market regular trading Thursday, baidu shares rose $4.25, $92.34, up 4.82%; But after released the above results, baidu shares fell $6.04 in after-hours trading, to $86.30, down nearly 7%.

in the first quarter performance profile :

– total revenue reached 5.969 billion yuan ($961 million), up 40% from a year earlier.

– operating profit of 2.21 billion yuan ($355.9 million), up 5.7% from a year earlier.

– vest in baidu’s net income of 2.043 billion yuan ($328.9 million), up 8.5% from a year earlier. American depositary receipts diluted earnings per share 5.88 yuan ($0.95); Regardless of the equity incentive spending, not measured in accordance with us gaap American depositary receipts of diluted earnings per share 6.2 yuan ($1).

Mr Li said: “in the first quarter of 2013, we remain committed to build China’s leading mobile ecosystem, and obtained the steady financial performance. Our exciting progress has been made in the field of mobile. In the current quarter, our most important mobile search products, the total number of active users more than one hundred million, up 25% on the end of the quarter.”

li also pointed out: “continuing to develop the most advanced search technology is still the center of the overall strategy, baidu, meanwhile, we have to include the image and voice recognition in areas such as the possibility of innovation are very excited. Over coming quarters and in the next few years to accelerate the transformation of the mobile Internet, we will continue to focus on baidu, the leading core advantages and travel search, e-commerce, LBS and the most valuable product vertical integration, so as to help users in both the PC and mobile terminal can find faster desires.”

baidu’s chief financial officer Jennifer li said: “baidu will continue to take active investment strategy, especially in the market and the research and development. We will put the resources deployment in baidu’s most strategic importance in the business, we have the confidence to bring excellent long-term value for our shareholders.” China-specific pointed out at the same time, baidu did the quarter in the first quarter for in the merger of statements.

industry analysts pointed out that significantly in baidu’s research and development investment, as its 2013 further embrace positive signal of mobile Internet development industry change. Under the center around the development of the technology advanced search strategy, speech and image recognition technology in the field of baidu is worth looking forward to more breakthroughs. At the beginning of the mobile Internet industry, the baidu last deep layout in technology innovation, especially the breakthrough of the core technology, to promote the development of the whole mobile Internet industry will play an important role.

Financial analysis

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baidu in the first quarter of the total revenue reached 5.969 billion yuan ($961 million), up 40% from a year earlier.

the degree of network marketing in the first quarter revenue reached 5.953 billion yuan ($958.5 million), up 39.7% from a year earlier. In the first quarter of 2013, baidu active network marketing customer number about 410000, a 1% increase over the previous quarter, compared with the same period last year growth of 27.7%. Baidu in the first quarter of this year average revenue from each customer network marketing is about 14500 yuan ($2335), from the previous quarter fell 6.5%, 9% higher than the same period last year.

baidu traffic acquisition costs (TAC) in the first quarter to reach 609.6 million yuan ($98.2 million), the proportion of total revenue of 10.2%, compared with 7.8% over the same period of last year, compared with 9.6% in the first quarter, on the growth is mainly due to the network through baidu advertising contribution and hao123 website promotion, etc.

the bandwidth costs in the first quarter of 404.9 million yuan ($65.2 million), the proportion of total revenue of 6.8%, up from 5.2% a year ago. Depreciation cost is RMB 333.1 million ($53.6 million), the proportion of total revenue of 5.6%, compared with 5.4% over the same period last year. In the first quarter of this year, baidu bandwidth cost and depreciation cost, the proportion of total revenue growth was mainly by the increase in network infrastructure capacity.

baidu content in the first quarter of the cost up to 95.8 million yuan ($15.4 million), about 1.6% of total quarterly revenue, compared with 0.7% over the same period of last year, the growth is mainly due to the merger in the impact of the business.

baidu in the first quarter sales, general and administrative expenses reached 848.1 million yuan ($136.6 million), up 77.2% from a year earlier, the growth is mainly due to the increase in spending.

baidu r&d spending in the first quarter to 810.7 million yuan ($130.5 million), up 82.9% from a year earlier, the growth is largely due to an increase in the number of r&d staff.

baidu equity incentives in the first quarter spending up to 110.9 million yuan ($17.9 million), in the same period last year to 35.2 million yuan, the last quarter of 66.6 million yuan, the year-on-year growth is mainly due to the increase in the number of equity of awarded to employees.

baidu first quarter operating profit of 2.21 billion yuan ($355.9 million), up 5.7% from a year earlier. Not included in the equity incentive related expenses is not measured in accordance with us gaap, baidu in the first quarter operating profit of 2.321 billion yuan ($373.8 million), up 9.2% from a year earlier.

baidu income tax in the first quarter spending up to 388.9 million yuan ($62.6 million), the income tax expenses of RMB 331.2 million over the same period last year. Baidu effective tax rate of 16.2% in the first quarter, up from 15.1% a year ago, in the last quarter of 16.2.

baidu should be accounted for in the first quarter net profit of 2.043 billion yuan ($328.9 million), up 8.5% from a year earlier. Baidu’s American depositary receipts in the first quarter of basic and diluted earnings per share were 5.89 yuan ($0.95) and 0.95 yuan ($0.95).

no equity incentives in the first quarter, baidu is not measured in accordance with us gaap net income reached 2.154 billion yuan ($346.8 million), up 12.3% from a year earlier, not measured in accordance with us gaap American depositary receipts of basic and diluted earnings per share were 6.2 yuan ($1).

as of March 31, 2013, baidu, the amount of cash and cash equivalents and short-term investments totaling 33.817 billion yuan ($5.445 billion). Baidu net operating cash flow in the first quarter of 2.186 billion yuan ($351.9 million), capital spending up to 468.2 million yuan ($75.4 million).

regardless of the equity incentive spending in the first quarter, baidu is not measured in accordance with us gaap earnings before interest, tax, depreciation and amortisation (EBITDA) of RMB 2.781 billion ($447.8 million), 13.9% more than last year.