Wednesday, February 14, 2007

Baidu.Com (BIDU)

BIDU tonight posted EPS of 48c - well above 36c estimates. Revenue was 34.8 mln vs estimate of $34.6 mln. As Piper Jaffrey correctly predicted yestreday the company cut its revenue outlook and now sees Q1 revenue of $34 mln to $35 mln versus consensus estimate of $38.2 mln. Read the BIDU summary here.

While Piper correctly saw the Q1 guidance drop coming, Hambrect this morning did not. Here's what they told investors:
"Guiding Below Q1:07 Consensus Not Likely, in Our View. We believe the likelihood for Baidu to guide below the current Q1:07 consensus is low. Consensus is looking for $38.4M in revenues, or an 11% Q/Q increase, which is reasonable, in our view, compared with a 27% sequential increase in Q1:05. Although the revenue base had tripled from 2005 to 2006, we feel the deceleration of growth should not be worse than that of the consensus, as the paid searc market is still extremely early in China (only ~1% penetration of SMEs)"

Wow, that sure turned out to be wrong. But the stock initially knee jerked down to $105, then recovered to finish with a gain of less than $1.

So flat sequential revenue on an internet high flyer. It's going to be an interesting morning tomorrow.


Anonymous said...

You were the money as to the news on guidance, kudos. I am really waiting to see how they explain their lowered revenue guidance, it seems out of whack with their current performance.

Anonymous said...

Odd. The Piper J. analyst as quoted on CNN and other places seem to say he expected this lowered revenues, and doesnt seem to be surprised??!?

Jim K said...

Right, Piper knew this was coming, but Hambrecht this morning said look for upside in Q1 revenue guidance. This is going to be interesting tomorrow morning. I've been out this evening with the family, but going through CC now.

Jim K said...

We'll see how this pans out in the morning. CC IMHO was pretty bad. flat sequential revenue on an internet high flyer along with the CEO and CFO admitting it may continue into 2nd quarter because of seasonality? Last year seasonality wasn't a problem. Not everything adds up. I'm willing to learn something new tomorrow and if the lesson is that it's ok for a company trading at 60x forward earnings - a $4 bln company that has quarterly revenue of $34 mln to lower guidance and for its shares to remain at triple digits and go higher - so be it.