Baidu, China's most popular search engine, saw year-on-year profit grow by almost 87 percent in the second quarter of 2008, the company reported Thursday as part of its quarterly results announcement.
Net income for the quarter was 265 million yuan (US$38.6 million) on total revenues of 802.6 million yuan. Net income was up 86.7 percent over the same period in 2007. Total revenue growth for the quarter increased 100 percent.
The company expects similar performance for the third quarter of 2008, offering guidance of 82 to 88 percent growth in total revenues over the third quarter of 2007, and 13 to 16 percent growth over this year's second quarter.
Baidu saw the Olympics as a potential impediment to short-term growth. "We believe the Olympics will be beneficial in the long run to our business and to the Internet business on the whole," said Jennifer Li, the company's chief financial officer, during a webcast of the company's results.
"During the games period, we expect our users may be spending more time watching the games and less time searching for business information," she said.
Both she and CEO Robin Li saw games viewing and localized restrictions on business -- such as limits on travel and some temporary business closures -- as reasons for "modest growth in total revenues during the third quarter."
Although all of Baidu's revenues come from its China operations, CEO Li said "Our Japan operation is progressing well," and that the company spent 30 million yuan there during the quarter. He said that Baidu will "open a research and development center in Shanghai later this year to serve Japan-related search applications."
Baidu routinely batters the competition in terms of the market share, estimated to be between 60 and 70 percent of search in China. The company generates most of its income from paid search, namely advertising based on paid results that appear when certain keywords are searched.