Shares in Chinese search engine company Baidu fell over 10 percent in after-market trading in New York, after it forecast second-quarter sales growth below market expectations.
According to data from Bloomberg, Baidu's American depositary receipts dropped to US$122.75 per share by 4.45pm in New York Tuesday. It had earlier during normal trading hours dipped 2.7 percent to US$135.83.
In Baidu's statement issued after Wednesday's market close, it forecast second quarter revenue ending June to rise to between 5.34 billion RMB (US$847 million) and 5.46 billion RMB (US$866 million). That compares with a 5.48 billion RMB (US$869 million) average of analysts' estimates compiled by Bloomberg.
First quarter results up
The dip in share prices comes despite a 76 percent jump in Baidu's first quarter net profit from a year ago to hit 1.8 billion RMB (US$299 million).
For the three months ended March, revenues reached 4.26 billion RMB (US$677 million)--a 75 percent increase compared to 2.4 billion RMB (US$385 million) from a year ago.
Commenting on the results, Robin Li, chairman and CEO of Baidu, said in the statement that despite the first quarter being a seasonally slow period, its sales and marketing effort has allowed its to increase its small and midsize business "significantly".
He also pointed to mobile and cloud computing as fast-emerging opportunities in the Chinese Internet landscape for the company. "We believe that Baidu is uniquely positioned to capture this immense growth potential in the Chinese online market," he noted in the statement.
Jennifer Li, chief financial officer at Baidu, added, that the company had continued to invest in talent and network infrastructure in the first quarter to support its long-term growth initiatives. "We are committed to this aggressive investment strategy for the year ahead and will maintain our focus on managing operational efficiency to ensure sustainable growth," she added.
Key revenue drivers
At 4.26 RMB billion (US$676.5 million), Baidu's online marketing revenues made up the majority of its revenues. The online ads segment saw a 75 percent increase compared to the same period last year when revenues were at 2.44 billion RMB (US$385.2 million).
The company noted that it had about 321,000 active online marketing customers in the first quarter of 2012, an increase of 17.2 percent from last year. The average revenue from each online marketing customer was about 13,300 RMB (US$2,112), it noted, adding that this represented a 49.4 percent increase from the first quarter of 2011 but a 7.6 percent decrease compared to the fourth quarter of 2011.
Similar to its U.S. counterpart Google, Baidu has been diversifying its portfolio to include mobile. The Chinese company launched the Baidu Yi mobile operating system last year and has partnered hardware companies such as Dell to launch Yi-powered handsets.