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Moody's: Baidu's fiscal year 2012 results support A3 rating
BEIJING, Feb 06, 2013 (Xinhua via COMTEX) --
Moody's Investors Service said that Baid
u Inc.'s 2012 financial results were in line with Moody's expectations
and support its A3 issuer and senior unsecured debt ratings.
The ratings outlook remained stable.
"While average revenue per customer saw a slight fall in the last q
uarter of 2012, driven by lower average revenue from new customers and
lower conversion rates from mobile traffic, overall profitability was
still high, as shown in its full-year GAAP based operating margin of
49.5 percent," said Lina Choi, a Moody's Vice President and Senior Ana
lyst.
"In addition, Baidu's core revenue and cash flow, derived from a gr
owing online search market, remain healthy and support its strong cred
it profile," said Choi.
"In 2013, Moody's will continue to monitor two issues closely, the
first one being Baidu's progress in mobile monetization," says Choi.
Management has referred to multiple new products, including locatio
n-based services launched in the past 12 months. These mobile search i
nitiatives, while generating more usage and traffic, have led to a low
er conversion rate and lower cost per click (CPC), and eventually lowe
r revenue per customer in the early stage of business development.
"Secondly, we will follow Baidu's acquisition strategy and its exec
ution," added Choi.
In the fourth quarter of 2012, the full consolidation of iQiyi, a v
ideo arm, resulted in a 100 bps dilutive impact on operating margins f
rom one month of consolidation. From a wider perspective, however, mos
t acquisitions carried out by Baidu in the last 2-3 years have been fi
nanced by internal cash flow, and have had a limited impact on the com
pany's overall financial profile.
Established in 2000 and listed on the Nasdaq in 2005, Baidu is the
dominant player in China's internet search market. The company has cap
tured approximately 75-80 percent market share in revenue and in numbe
rs of search queries in the Chinese online search market. In addition
to online search, Baidu also offers a wide range of diversified produc
ts and serves to boost traffic and enhance user stickiness. (Edited by
Duan Jing, duanjing@xinhua.org)
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