Baidu jumps $90 on profit from Google's China exit

chart_ws_stock_baiduinc1.top.png By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- Shares of Chinese search company Baidu leapt by nearly $90 Thursday after the company reported that its profit more than doubled following rival Google's exit from the search business in China.

Baidu's (BIDU) stock climbed 14%, or $88.49, to $709.87 a share. The stock has risen more than 80% since Google first announced in January that it might end its search business in China. Shares of Google (GOOG, Fortune 500), meanwhile, have fallen 12% over the same time period.

Google moved its servers out of the country and stopped censoring its search results in China on March 22. Chinese authorities have responded by blocking access to to certain search results for users within the country's borders.

During the scuffle with China, Google lost a significant share of the Chinese Internet search market, much to Baidu's benefit. Many Chinese Web sites that had been using Google's search engine switched to Baidu's engine during the quarter.

Google's market share in China fell to 31%, down from 35.6% in the previous three months, according to online traffic analyst Analysys. Meanwhile, Baidu's share rose to 64% in the first quarter, up from 58.4% in the fourth quarter.

Still, Baidu's results surprised even the most bullish analysts.

Late Wednesday, the Chinese search giant reported first-quarter net income of $70.4 million, or $2.02 a share, up 165% from a year earlier. Revenue rose 60% to $189.6 million.

According to a Thomson Reuters poll, Wall Street expected earnings of $1.52 per share on revenue of $180 million.

The company, which raised its sales outlook, said it still has plenty of room to grow.

"For the rest of the year, we will aggressively expand our research and development and sales teams to drive improvements in technology and monetization," Jennifer Li, Baidu's chief financial officer, said in a prepared statement.

Some analysts think that Baidu's strong quarter and recent stock movement had more to do with Google's exit from the China search market than Baidu's fundamentals.

"Not much has changed except that Baidu's biggest competitor has left," said Daniel Ruby, research director at Chitika Inc., an online advertising network. "It's free and easy for Baidu now -- who's really left there to challenge it?"

But Ruby also said that Baidu has tremendous growth potential independent of its competition.

"No one has really found the key to monetizing search in China," he said. "You've got to expect that Baidu will find better ways to monetize the incredible market share that they have. So I don't think this growth is temporary." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,079.57 -42.44 -0.25%
Nasdaq 4,557.70 -11.93 -0.26%
S&P 500 1,996.74 -3.38 -0.17%
Treasuries 2.33 -0.03 -1.14%
Data as of 12:09am ET
Company Price Change % Change
Apple Inc 102.25 0.12 0.12%
Bank of America Corp... 16.01 -0.19 -1.17%
Facebook Inc 73.86 -0.78 -1.04%
Pfizer Inc 29.38 -0.11 -0.37%
Intel Corp 34.65 -0.14 -0.40%
Data as of Aug 28

Sections

The CEO of American International Group, Robert Benmosche, says he is leaving the company earlier than expected because of a terminal cancer diagnosis. More

Prime Minister Shinzo Abe has been trying to reshape Japan's economy. Can he end deflation and deliver a revival? More

Whether you've got wanderlust or an airline grievance, here are some apps to pack onto your phone. More

Whether you've got wanderlust or an airline grievance, here are some apps to pack onto your phone. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.