HONG KONG: Baidu Inc, China’s leading Internet search company, set off alarm bells on Wall Street after a disappointing second-quarter revenue forecast raised doubts on its growth prospects and knocked down its shares more than 10% after hours.
The tepid outlook from Baidu, which had consistently blown past investors’ expectations thus far, brought up questions on whether emerging competition from the likes of Alibaba Group would wear it down and if it could make a success of recent moves into other lucrative Internet sectors such as e-commerce.
Baidu posted on Tuesday first-quarter results that were in line with analysts’ estimates. But the second-quarter revenue forecast was at the low end of Wall Street’s expectations, with the midpoint of the range at US$857.1mil against the US$862.8mil seen by analysts polled by Thomson Reuters.
“At the end of the day, people expect these companies to beat numbers. They have a track record of usually beating,” said Raymond James analyst Aaron Kessler.
On a quarter-on-quarter basis, the revenue forecast showed 25%-28% growth.
“Baidu has never done anything below 35% sequential growth in the second quarter, so to guide in the high-20s is certainly a significant revenue deceleration,” said Hong Kong-based Nomura analyst Jin Yoon. – Reuters
Did you find this article insightful?