Baidu Takes A Financial Hit Based On Spoiled Milk Controversy

Posted Feb 19, 2009

Baidu, Inc. (NASDAQ:BIDU), also known as the Google of China has had a slow fourth quarter because of tainted milk controversy.  The last quarter was the company’s first sales decline since they were listed on the NASDAQ in 2005. was accused of managing the searhc results on behalf of milk company Sanlu.  Sanlu’s milk allegedly contained melamine thus poisoning and hospitalizing thousands of children.

Baidu denied the accusations but decided to remove the paid search advertisements of medical and pharmaceutical customers that have not filed for government licenses.  The removal of these links reduced sales by 5%.

Baidu’s fourth quarter sales were about RMB902.1 million ($132.2 million), up 58% from the previous year in the same quarter.  Baidu’s third quarter sales were RMB919.1 million.  This quarter, Baidu expects their sales to be between RMB780 million and RMB800 million.  Net profit for the fourth quarter was about RMB288.7 million, up from 31.3%.