Download - Baidu Earnings: 3 Things to Watch
Baidu Earnings:
3 Things to Watch
Short-Term Investors
Short-Term Investors
Revenue: $1.92 B
FY 2014: $7.82 B
EPS: $1.32
FY 2014: $5.22
Wall Street Expectations
Short-Term Investors
• It’s important to understand that while Baidu is growing revenue by leaps and bounds, earnings are expected to jump by more modest amounts.
• This is because the company is investing heavily in mobile and app platforms that should drive both revenue and profitability for years to come.
Medium-Term Investors
Medium-Term Investors
Many will closely follow the company’s total paid clicks and cost per click metrics.
Advertising Clicks
Medium-Term Investors
Generally, as more mobile ads are displayed, cost per click (CPC) goes down, as the total number of paid clicks goes up.• In 2013, paid clicks increased 33%. The company
usually only makes vague comments on paid click increases in quarterly conference calls.
• In the fourth quarter of last year, CPC on mobile devices was about 60% of what it was on desktop. Management should comment on this in the conference call, and investors should hope this number moves ever-higher.
Long-Term Investors
Long-Term Investors
The Chinese Internet is quickly changing. Baiduneeds to maintain dominance in the mobile and PC search market.
Total Search Market Share
Long-Term Investors
Baidu once had a commanding 80% market share of China’s PC search market. Qihoo has taken as much as 25% of that, and Baidu now stands at 58% among PC searches.
• However, Baidu still commands 73% of the combined mobile/PC search market.
• As this is still primarily an advertising business, sustaining market share is vital for the decades to come.
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