Earnings: Baidu Picks Up, Huawei Hurts 百度和华为公布业绩
Leading search engine Baidu (Nasdaq: BIDU) and top telecoms equipment maker Huawei have both just announced their latest quarterly results, reflecting slowing growth both at home and abroad that each will have to deal with as the global and Chinese economies struggle. But whereas Huawei’s story looks rather dire, Baidu was able to post some solid advertising numbers, showing it remains resistant so far to a downturn that has affected many of its rivals.
Let’s look at Baidu’s numbers first, which show that its profit rose nearly 70 percent in the second quarter, down slightly from growth of about 75 percent in the previous 2 quarters. (company announcement) The steady profit growth contrasts sharply with revenues, whose growth is rapidly slowing. Baidu forecast its revenue would grow at about 50 percent in the current quarter, a slowdown from the 60 percent growth rate in the second quarter, 75 percent in the first quarter, and 82.5 percent in last year’s fourth quarter.
But investors don’t seem to be too concerned about that rapidly slowing growth, bidding up Baidu shares by around 10 percent after the results came out. Perhaps investors are encouraged by Baidu’s core advertising business, which accounts for the majority of its revenue, and rose 60 percent for the quarter. And equally or more significant, advertising per customer also rose from the first quarter, reversing a rare contraction the previous quarter.
The numbers look quite mixed to me overall, but apparently investors are focusing on the fact that Baidu has been able to maintain strong profit growth despite rapidly weakening revenues. Still, as revenue growth drops sharply in the coming quarters I would expect profits will also come under pressure if and when Baidu finally starts to feel the squeeze of the advertising crunch hitting the broader Internet sector.
Moving on to Huawei, the company reported its operating profit slid 22 percent in the first half of 2012, even as its revenue notched a small gain of 5 percent. (company announcement) Since it’s not a public company, Huawei hasn’t provided us with much detail on its results, though it did note that the current climate remains a “significant challenge”. In addition to dealing with spending downturns at home and overseas, Huawei and crosstown rival ZTE (HKEx: 763; Shenzhen: 00063) have also had to contend with numerous obstacles in North America and Western Europe, where they are being investigated over claims that they receive unfair subsidies from Beijing and that their equipment could pose a security risk.
Huawei’s biggest global rivals, Ericsson (Stockholm: ERICb), Alcatel-Lucent (Paris: ALUA) and Nokia Siemens Networks, are all also feeling quite a bit of pain these days as telcos cut back on their global spending, and I wouldn’t expect that situation to reverse anytime soon. As a result, we can expect more profit erosion for Huawei through the end of this year, and I wouldn’t be surprised either if its revenue also contracts in the second half.
Bottom line: Baidu’s profit growth is likely to start slowing in line with its rapidly slowing revenue growth, while Huawei’s revenue growth could disappear completely in the second half of 2012.
Related postings 相关文章:
