Baidu Posts Mixed Q3 Earnings, Sending Its Shares Sideways

Today Baidu reported its third-quarter financial performance, including revenue of $2.203 billion and GAAP earnings per share of $1.79. The market had expected the Chinese company to earn $1.69 per share on revenue of $2.22 billion. Excluding the costs of share-based compensation, Baidu earned $1.90 per share (non-GAAP).

The company, which fell nearly 2 percent in regular trading, is off another 1.7 percent in after-hours trading.

The company’s operating profit in the quarter of $638.6 million was up 17.4 percent on a year-over-year basis. Its revenue figure was up a sharper 52.0 percent compared to the year-ago period. Nearly all of Baidu’s revenue comes from its online marketing income, which totaled $2.188 billion in the quarter. Baidu is best known for its online search property.

Baidu spent $283.8 million in traffic acquisition costs in the quarter, or 12.9 percent of its total revenues. That percentage figure is up from its year-ago comparable statistic of 11.2 percent.

Investors seem to not know what precisely to do with Baidu shares after the report. The after-hours chart shows a bit of indecision:

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Looking ahead, Baidu expects its revenue to expand to between $2.256 billion, and $2.322 billion. Those figures represent a roughly 45 to 50 percent improvement in its calendar fourth quarter of 2013, the comparable period. The company did not guide on profit.

Trading for around $224 per share, Baidu has been increasing in value nearly steadily since the middle of 2013. The company went public in 2005 with revenue in the single-digit millions per quarter. The company executed a stock split in 2010, which brought its share price down from more than $700. Since then, its shares have tripled in value. The company is worth north of $80 billion.