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China's Baidu.com doubles profit, but future guidance causes jitters

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Baidu (NASDAQ: BIDU) logoBaidu.com (NASDAQ: BIDU), China's largest search engine, said this week that it beat profit expectations by doubling its most recent quarterly profit, but shares still are trading quite a bit below where they were just a few weeks ago as the company's management warned on profit guidance moving forward, which fell a little flat compared to what analysts were expecting. Maybe analysts are expecting too much, too soon? It wouldn't be the first time for recklessly, short-mindedness palpitations from Street "experts."

Baidu.com's shares have been on a speculative and hyped journey this year (they are priced way out of whack considering fundamentals), but reality did return to the picture a bit as of a few weeks ago when those shares came crashing down in what could be seen as a needed correction. Although Baidu.com operates as the largest search provider in the world's most populous country, it's no Google (NASDAQ: GOOG) when it comes to monetizing all those eyeballs -- yet.

Baidu.com has a very enterprising future in front of it, although a large question remains on whether it can rake up those revenues like Google has managed to do in many global markets. Yahoo! (NASDAQ: YHOO) is in a similar position: It captures billions of views every month, but lacks the advertising prowess to smartly monetize that traffic compared to industry leader Google. But an advertising explosion is still in the infant stages in China, and Baidu.com -- if it plays its cards right -- has a huge potential in front of it. But torrid, rapid growth? That may still be too much to expect in the next quarter or so.

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Last updated: November 24, 2009: 03:09 PM

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