Baidu, Sohu Results: Ad Market Stabilizing 百度、搜狐财报：广告市场趋稳
Baidu (Nasdaq: BIDU) and Sohu (Nasdaq: SOHU) are kicking off the China Internet earnings season with results that don’t look particularly exciting but do appear to show some early signs that China’s collapsing advertising market may be near a bottom. If that’s the case, look for the situation to stabilize and start to rebound as early as the second quarter for advertising-dependent firms, perhaps providing a good buying opportunity as spending starts to pick up around the middle of the year.
Investors clearly weren’t very impressed by the latest results that have just been released by online search leader Baidu or Sohu, a major web portal. Shares of both companies shed about 6 percent after their results came out, with investors focusing on tepid guidance from both companies for the current quarter.
Let’s take a look first at Baidu, which is still China’s second largest listed Internet company even though a prolonged sell-off of its shares means it most likely gave up the overall number 2 spot to unlisted e-commerce leader Alibaba sometime last year. Baidu’s latest numbers show its profit and revenue growth both continued to slow at a somewhat alarming rate in the fourth quarter, following years of breakneck expansion that saw investors get accustomed to triple-digit growth rates. (results announcement)
Baidu’s profit grew 36 percent in the fourth quarter, a sharp slowdown from the 60 percent growth rate in the third quarter and about half the 70 percent growth rate in last year’s second quarter. Revenue growth also slowed to 42 percent in the fourth quarter, again down from 50 percent and 60 percent in last year’s third and second quarters, respectively.
But in one small sign of encouragement, the company forecast revenue, the vast majority of which comes from advertising, would grow at about 40 percent in the current quarter, or roughly equivalent to fourth-quarter growth. If the company meets that target, it could represent a stabilization of Baidu’s revenue and profit growth, meaning advertisers could finally be preparing to boost their spending later in the year if China’s economy continues to improve.
Meantime, Sohu’s results also showed some early signs of stabilization, with the company’s profit declining 8 percent for the quarter. (results announcement) While a profit decline is never a good thing, the figure marked an improvement over the previous quarter when Sohu’s profit fell an even sharper 20 percent.
Revenue also showed some encouraging signs of stabilization, rising 22 percent for the quarter, roughly the same as the third-quarter’s 23 percent gain. Within the total revenue figure, however, advertising revenue growth slowed sharply to just 6 percent in the fourth quarter, down from 19 percent in the previous quarter; and revenue growth from the company’s search engine, sogou.com, also slowed sharply. But the company forecast that both advertising and search revenue growth would reverse their slowdowns and accelerate in the current quarter, again indicating that the downturn in the ad market may have reached a bottom.
We’ll need to wait until April when companies announce their first-quarter results to see if the advertising downturn really has reached bottom and the market is set for a rebound. But my early sense is that we could see a nice rebound in the second half of the year, providing some long-awaited good news for advertising dependent companies like Baidu, Sohu and Sina (Nasdaq: SINA).
Bottom line: The latest results from Baidu and Sohu show the current advertising downturn may be near bottom, with a rebound possible in the second half of this year.
Related postings 相关文章:
