Baidu Inc., which operates China's most popular Internet search engine, said Wednesday its quarterly earnings jumped 48 percent, beating analysts' expectations on strong revenue growth.
The announcement comes amid a dispute between rival Google Inc. and China's government over Internet censorship and hacking.
During the three months ending Dec. 31, Baidu earned $62.7 million, or $1.80 per share, in the quarter compared with $42.3 million, or $1.22 per share, in the same period a year earlier. Excluding stock-based compensation expenses, Beijing-based Baidu earned $1.88 per share in the latest quarter.
Revenue rose 40 percent to $184.7 million. On average, analysts polled by Thomson Reuters projected profit of $1.68 per share on revenue of $180 million.
The results also exceeded Baidu's expectations and were driven by the success of a new system for advertisers to bid on paid links to search words, Phoenix Nest, said CEO Robin Li.
"With a solid base of users and customers, our foundation is stronger than ever and we will continue to drive innovation to capture market opportunities ahead," Li said in a statement.
Chinese Internet companies have seen profits grow over the past even as the global economic crisis hurt China's exports. Domestic growth and consumer spending have benefited from a 4 trillion yuan ($586 billion) government stimulus.
Google announced Jan. 12 that it no longer wanted to cooperate with Chinese censorship and might shut down its China-based site Google.cn. The company also complained about China-based hacking of its e-mail service.
Industry analysts say that if Google leaves, Baidu should be able to pick up the bulk of its Chinese advertisers. But they say the Chinese service also might suffer if former Google users switch to Baidu and are unsatisfied with its service.
Chinese officials defended the government's censorship and denied the government was involved in the cyber-attacks.
Baidu had 58.4 percent of China's search market in the final quarter of 2009, while Google had 35.6 percent, according to Analysys International, a Beijing research firm. Google has steadily gained market share from smaller rivals but has failed to dent Baidu's lead.
Baidu has begun to expand abroad with the launch of a Japan-based search site in 2007 and said costs related to that service were $6.3 million for the quarter, which reduced diluted earnings per share by 18 cents.
For the first quarter of this year, Baidu forecast revenue of $176 million to $181 million. Analysts predict revenue of $170.2 million.
For the year, Baidu's net income rose 42 percent to $217.6 million, or $6.26 per share. Revenue climbed 39 percent to $651.6 million.
Shares of Baidu rose $38.14, or 8.8 percent, to $473.15 in after-hours trading. The stock earlier slid $8.22 to end regular trading at $435.01. It has ranged from $119.65 to $470.25 over the past year.
On the Net:
Baidu Inc.: www.baidu.com