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Last Updated: Wednesday, 24 August 2005, 16:11 GMT 17:11 UK
Market sees Baidu growth slowing
Chinese internet cafe
Baidu.com is hoping to exploit growing use of the internet in China
Shares in Baidu.com, the Chinese language internet search firm, have fallen as much as 8.5% on concerns that its sales growth is about to slow.

Baidu made a sensational debut on the Nasdaq stock market in the US earlier this month, its shares rising 350% on their first day's trading.

But Baidu's trading forecasts for the third quarter of 2005 suggest that the pace of sales growth may cool.

Baidu is China's leading search engine firm in a rapidly-growing market.

'Pleasing results'

It is competing against the likes of Google and Yahoo in its home market, the world's second largest for web searches.

Publishing second quarter results - the first trading information since its August 5 flotation - Baidu said it had generated net income of 12.1m yuan ($1.5m; 830,000) on sales of 69.7m yuan.

This represented a 380% rise in profits and a 52% rise in sales on the previous quarter.

Our recent successful IPO demonstrated strong investor confidence in the prospects of China's internet search market
Robin Li, Baidu.com chairman

However, analysts said quarter-on-quarter sales growth would slow to between 11% and 16.5% if Baidu's third quarter forecasts were borne out.

Baidu is expecting revenues of between $9.6m and $10m over the next three months.

The company said it was "very pleased" with its recent trading performance, adding that it had seen a 29% increase in companies paying for advertising or placement.

"Our recent successful IPO demonstrated strong investor confidence in the prospects of China's internet search market, in our business model as well as in our management team," said chairman Robin Li.

Baidu's shares initially fell 8.5% to $75 on Wednesday but recovered slightly to $80.34 by late morning.

Baidu's shares were valued at $27 upon flotation but quickly rose in value to more than $120 after a burst of frenzied buying.


SEE ALSO:
Chinese web firm to join Nasdaq
05 Aug 05 |  Business
Google seeks out China's billions
11 May 05 |  Business
All roads lead east for web firms
11 Aug 05 |  Business


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