Google's exit proves a boon to Baidu as Q1 net profit soars

Baidu, Inc., which holds a dominating share of China's search engine market, reported Thursday its net profits for the first quarter of 2010 more than doubled from a year earlier, a spike attributable to rival Google's exit from the mainland market.

For the first quarter ended March 31, Baidu's total revenues rose 59.6 percent from the previous year to a net 1.294 billion yuan ($189.54 mil-lion). Its net profits during the same period totaled 480.5 million yuan ($70.38 million), a 165.3 percent jump year-on-year, according to the company's first quarterly report since Google shifted its Chinese search engine Google.cn to its Hong Kong site in March.

The Chinese Internet operator estimates its total revenues will continue to rise in the second quarter, to an estimated 1.83 billion-1.87 billion yuan ($268.06-$273.91 million), a 67-70 percent rise year-on-year, a record high expectation, it said in a statement Thursday.

The company has benefited a lot from Google's exit from the mainland, Li Yanhong, chairman and CEO of Baidu, said in a conference call Thursday after the quarterly financial results were announced.

Google's services on its Hong Kong site remain unstable for mainland users for the moment, affecting its traffic and advertisers' confidence, offering opportunities to Baidu, said Cao Junbo, chief analyst with iResearch, a Beijing-based Internet marketing research firm.

Baidu's share of China's search engine market in the first quarter of this year increased to 64 percent from 58.4 percent a quarter earlier, while Google's market share slipped to 30.9 percent from 35.6 percent, according to Analysys International, a market research firm based in Beijing.

Google remains at an advantage in the long-run, given its clout in overseas markets, which attracts advertisers hoping to expand outside the country, Cao said, adding advertisers' confidence will gradually recover as its Hong Kong site's services and traffic become stable.

Baidu's bullish reports did not change Credit Suisse's opinion, however. Credit Suisse Thursday maintained a downgrade of Baidu's ratings to underperforming from neutral, owing to expensive valuation, while raising its price target to $250 from $200.

Baidu's shares eased 3.2 percent to close at $620.11 Tuesday on the NASDAQ.