Baidu Raises Revenue Forecasts In Wake Of Google’s Potential China Exit

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Baidu, the leading search engine operator in China, this afternoon reported blow-out financial results for the fourth quarter of 2009. The company’s Q4 profit rose 48.2% to 427.9 million yuan (approx. $62.7 million), or $1.80 a share. Revenue rose 40% to 1.26 billion yuan, or about $184.7 million, compared to the same period a year ago.

In the wake of Google’s stand against censorship of its search engine in China and its consideration to cease business operations in the country altogether, Baidu – to Wall Street’s surprise – raised its sales forecasts for the first quarter of 2010, projecting total revenues ranging from $176 million to $181 million, representing a 48% to 52% year-over-year increase.

In other words, Baidu expects to benefit directly from Google’s possible exit from China, although that dispute is far from resolved at this point.

Baidu has performed better than other Chinese Internet stocks this year on expectations that the company will gain sales from Google’s customers in China, the world’s largest Web market with an estimated 380 million users (according to eMarketer).

The Beijing-based firm holds about 64% of the country’s search market share, well ahead of Google.cn, which holds approximately 31%. Google stands to lose a large chunk of that share if it ends up exiting the Chinese market, which is not a made decision yet. The Mountain View, California company threatened to leave China after being hit with cyber attacks that originated from the country.

The reported financial results and the raised forecasts sent Baidu’s shares up 8.68% at $473 in after-hours trading. Clearly, investors don’t care much about the decision of both Baidu’s CTO and COO to quit the company for ‘personal reasons’ earlier this year.

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