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Baidu Revenue Growth Returns, up 37 Percent

Chinese online search leader Baidu returned to ad sales growth in the second quarter, escaping the effects of a scandal late last year over troublesome medical ads.

Baidu's number of advertisers and the average revenue it gained from them both rose in the three months ended June 30, the company said in a statement on Thursday.

Baidu's revenue for the quarter was 1.1 billion yuan (US$160.7 million), a 37 percent increase over a year earlier. The increase from the previous quarter was 35 percent.

The results were a turnaround from the past two quarters, when Baidu's revenue fell as it removed some advertisers. The company conducted the cleanup following a media report that it hosted ads from unlicensed pharmaceutical and medical vendors.

"The quality of our customer base has improved a lot," Peng Ye, Baidu's chief operating officer, said in a conference call.

Baidu's net profit was 383 million yuan, a 45 percent increase over a year earlier.

Baidu is by far China's dominant search engine, especially outside major cities. Its main rival, Google, is more popular among urban users, but the companies are still racing each other to expand the services on their portals.

Nearly 75 percent of Web searches in China were done on Baidu in the first quarter, while nearly 21 percent were done on Google, estimates iResearch, a Chinese Internet consultancy.

Baidu added about 100 new staff during the quarter, bringing its headcount to around 6,300, said Jennifer Li, Baidu's CFO. That growth will continue in the third quarter as Baidu adds sales staff to support its new advertising platform, branded Phoenix Nest. New research and development hires will also rise this quarter as the company adds recent graduates, she said.

Baidu saw some signs of recovery in China's economy in the last quarter, but overall economic conditions remained difficult, Robin Li, Baidu's CEO, said during the call.

Baidu forecast that its revenue in the third quarter would grow by a further 15 to 18 percent sequentially.

(IDG, the parent company of IDG News Service, is an investor in Baidu.)

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