's (BIDU) quarterly results show total revenues increased by 24.9% sequentially or 169.1% year-over-year to CNY239.3 million.

"During the quarter, we continued to strengthen our position as the leading provider of Chinese language search," said Robin Li, Baidu's Chairman and CEO. "By focusing on enhancing and expanding both our core search functionality and our suite of community-based search products, we continued to achieve significant traffic growth and market share expansion."

Online marketing revenues for the third quarter were CNY237.6 million, representing a 25.7% increase from the second quarter of 2006 and a 176.7% increase from the third quarter of 2005. The growth was driven by the increase in the number of active online marketing customers, which increased by 13.3% from the second quarter of 2006 to more than 102,000 for the third quarter. Revenue per online marketing customer for the third quarter increased to CNY2,330 from CNY2,081 in the second quarter, a sequential increase of 12.0%.

Traffic acquisition cost as a component of cost of revenues was CNY21.6 million, representing 9.0% of total revenues, compared to 9.2% in the second quarter of 2006.

Selling, general and administrative expenses were CNY70.2 million, representing a 19.5% increase from the previous quarter and a 90.0% increase from the third quarter of 2005.

Research and development expenses were CNY24.5 million, representing a 34.2% sequential increase and a 66.9% increase from the corresponding period in 2005, primarily due to headcount increases.

Share-based compensation expenses, which were allocated to related cost and expense line items, increased in aggregate to CNY16.4 million in the third quarter of 2006 from CNY11.7 million in the previous quarter. The increase in share-based compensation expenses primarily reflects a change in accounting estimates of the forfeiture rate. The

company did not grant a significant amount of options or restricted shares during the third quarter.

Operating profit was CNY76.2 million, representing a 31.5% increase from the previous quarter and a 1002.0% increase from the third quarter of 2005.

As of September 30, 2006, the company had cash, cash equivalents and short-term investments of US$137.1 million.


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