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Women are planning to spend less according to two surveys released today.

In a survey by the Marketing to Moms Coalition, moms plan to cut spending on holiday gifts. Offline is expected to be hit the hardest, with an 8% drop over last year. Online will decline by 2%.

• 87% of moms plan to shop at big discount retailers like Wal-mart and Target
• Department stores come in second at 37%.
• Shoe and specialty clothing retailers come in third at 35%.

“Older kids tend to want expensive presents like cell phones, video games, trendy clothes and computer equipment,” says Maria Bailey, a founder of the Marketing to Moms Coalition, and author of the book, Mom 3.0, Marketing with Today’s Mother by Leveraging New Media and Technology. “Moms are telling their older kids that this year, they’re just going to have to wait.”

Another survey from Frank About Women shows that women (not just moms) are planning to cut holiday spending. First on the chopping block? Themselves.

62% of women are asking friends and family to forgo buying them a gift this year due to the economy.

They asked survey participants who would be cut from the gift list that normally would be on.

• 57% of those who normally give gifts to their neighbors plan to forego the gift this year
• 53% will skip their bosses
• 52% will cut employees and service providers (i.e. hairdressers) from their list
• 50% won’t give gifts to co-workers this year

So, who is getting a gift this year?

• 96% said they won’t let a bad economy stand in the way of giving gifts to their kids
• 86% will give gifts to their parents
• 85% will give gifts to their spouse or partner (Stay out of the dog house, guys!)

“Not only are women planning to spend less on others, they are actively encouraging their friends and family to omit them from the gift list this year,” says Nicole Green, senior strategic brand planner at FAW. “This self-sacrificing mindset represents a significant cultural shift as a renewed sense of fiscal responsibility and frugality trump spending and splurging for many women. Marketers who speak to the real meaning of the holidays are more likely to resonate with women this season and benefit from their spending power.”

Related Reading:
Microsoft Study Reveals Online and Digital Behavior of Women
Mom Bloggers Prove Powerful Resource to Marketing and Branding Success
Moms See Search as Task-Oriented; Websites as Entertainment

Auto search engine Cars.com is offering a free webinar intended to help dealerships learn how online advertising can drive offline traffic.

The webinar will be held this Friday, November 14 at noon EST. Click here for more details and to register for the event.

Here are the specifics of what will be presented:

• Traffic-now vs. branding as the key advertising objective.
• Websites and online features that car buyers use before visiting a store.
• Ingredients of internet ads that drive store traffic.
• A full accounting of internet-generated store traffic.

“A significant percentage of in-market car buyers prefer to take the next step toward a purchase on the most direct path, an in-store visit,” said Dennis Galbraith, Cars.com vice president of advertising products. “These shoppers may not call or email first, so the information they find online determines the dealers they select. Dealers who fully merchandise their complete inventory with multiple pictures, descriptive sell copy and competitive pricing position themselves to win more than their fair share of the business.”

Related Reading:
Yahoo Adds Cars.com, Forbes.com and Ziff-Davis to Publishers’ Network
Cars.com Listings Hit Mobile Devices
Cars.com Drives Ad Campaign to Web

Baidu is getting in the consumer-to-consumer (C2C) game (think eBay or indie sellers on Amazon.com) with a new site, Youa.com.

In the beginning, 10,000 sellers were chosen from over 100,000 applicants. 50,000 customers were chosen from Baidu’s online communities.

“Baidu Youa continues Baidu’s tradition of providing the best possible online experience for our users,” said Mr. Jun Yu, Baidu’s vice president of products. “This new C2C platform provides user-friendly shopping with emphasis on customer service.” Mr. Yu continued, “Our expansion into China’s early- stage e-commerce market is a natural move for Baidu as Chinese netizens are becoming more comfortable shopping online. With our vast user community, technological expertise, mature product offering and deep understanding of Chinese Internet landscape, we believe that we have a competitive edge in China’s C2C arena and look forward to taking full advantage of the growth potential of this sector of the Internet.”

Related Reading:
Baidu’s Profit Increases 91% in Third Quarter 2008
Omniture’s SearchCenter Now Integrated with Chinese Search Engine Baidu.com
1.8 Billion Internet Users by 2012, China to Overtake US Internet Use by 2011
Baidu Search Engine Launches IM in Beta - Baidu Hi

Microsoft announced its earnings for the fiscal quarter ending September 30, 2008. For them, it’s the first quarter of their fiscal year, while other companies go with the traditional calendar and call it their third quarter.

Their net income increased by 2%. This was due largely in part to XBox360, a gaming console which recently received a price slash.

It has been widely noted that Microsoft has a bunch of cash on hand, especially since they didn’t end up acquiring Yahoo after all (yet). MSFT was up .28 at the time of this post. Though with the markets as volatile as they are, that could change at any minute.

Here’s the press release:

Microsoft Reports Record First-Quarter Revenue
Thursday October 23, 4:10 pm ET
Revenue surpasses $15 billion with healthy sales of enterprise software and Xbox 360 consoles

REDMOND, Wash., Oct. 23 /PRNewswire-FirstCall/ — Microsoft Corp. today announced revenue of $15.06 billion for the fiscal quarter ended Sept. 30, 2008, a 9% increase over the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $6.00 billion, $4.37 billion and $0.48, respectively.

Microsoft showed particular strength in multiyear annuity sales, which grew more than 20% during the quarter from the combined businesses of Client, Microsoft Business Division and Server and Tools.

“Our customers are asking how they can save money and do more with less,” said Kevin Turner, chief operating officer at Microsoft. “Microsoft is uniquely positioned to help our customers save money through supplier consolidation, increased productivity, and a low total cost of ownership through the depth and breadth of our product portfolio and solutions.”

Microsoft continued to add to its product and services portfolio with innovative offerings such as Microsoft SQL Server 2008, Microsoft Hyper-V Server 2008 and the first service update to Microsoft Dynamics CRM Online.

“In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model,” said Chris Liddell, chief financial officer of Microsoft.

Business Outlook

Microsoft’s business outlook reflects a balance of risks and the likelihood of a continued economic slowdown. The trends seen late in the first-quarter are now forecasted to continue, whereas previous expectations were for the economy to improve in the second half of the fiscal year. In this economic environment, the company is focused on three main actions; working with customers to provide high value products at the lowest total overall cost of ownership, increasing focus on expense management and targeting investment into the highest priority strategic opportunities.

Microsoft management offers the following guidance for the quarter ending
Dec. 31, 2008:
— Revenue is expected to be in the range of $17.3 billion to
$17.8 billion.
— Operating income is expected to be in the range of $6.1 billion to
$6.4 billion.
— Diluted earnings per share are expected to be in the range of $0.51 to
$0.53.

Management offers the following guidance for the full fiscal year ending
June 30, 2009:
— Revenue is expected to be in the range of $64.9 billion to
$66.4 billion.
— Operating income is expected to be in the range of $24.4 billion to
$25.5 billion.
— Diluted earnings per share are expected to be in the range of $2.00 to
$2.10.

Liddell noted that “we feel extremely good about our relative competitive position and our ability to continue outgrowing IT spend. We believe our exceptionally strong cash flow, product pipeline and financial strength will allow us to weather economic conditions well.”

Webcast Details

Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today with Chris Liddell, senior vice president and chief financial officer, Frank Brod, corporate vice president and chief accounting officer, and Bill Koefoed, general manager of Investor Relations, to discuss details of the company’s performance for the quarter and certain forward-looking information. The webcast will be available for replay through the close of business on Oct. 23, 2009.

About Microsoft

Founded in 1975, Microsoft (Nasdaq: MSFT - News) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

— challenges to Microsoft’s business model;
— intense competition in all of Microsoft’s markets;
— Microsoft’s continued ability to protect its intellectual property
rights;
— claims that Microsoft has infringed the intellectual property rights
of others;
— the possibility of unauthorized disclosure of significant portions of
Microsoft’s source code;
— actual or perceived security vulnerabilities in Microsoft products
that could reduce revenue or lead to liability;
— government litigation and regulation affecting how Microsoft designs
and markets its products;
— Microsoft’s ability to attract and retain talented employees;
— delays in product development and related product release schedules;
— significant business investments that may not gain customer acceptance
and produce offsetting increases in revenue;
— changes in general economic conditions that affect our investment
portfolio or demand for computer hardware or software;
— adverse results in legal disputes;
— unanticipated tax liabilities;
— quality or supply problems in Microsoft’s consumer hardware or other
vertically integrated hardware and software products;
— impairment of goodwill or amortizable intangible assets causing a
charge to earnings;
— exposure to increased economic and regulatory uncertainties from
operating a global business;
— geopolitical conditions, natural disaster, cyberattack or other
catastrophic events disrupting Microsoft’s business;
— acquisitions and joint ventures that adversely affect the business;
— improper disclosure of personal data could result in liability and
harm to Microsoft’s reputation;
— outages and disruptions of online services if Microsoft fails to
maintain an adequate operations infrastructure;
— sales channel disruption, such as the bankruptcy of a major
distributor; and
— Microsoft’s ability to implement operating cost structures that align
with revenue growth.

For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations Web site at http://www.microsoft.com/msft.

All information in this release is as of Oct. 23, 2008. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

Microsoft Corporation
Income Statements
(In millions, except per share amounts) (Unaudited)

Three Months Ended
September 30,
2008 2007

Revenue $15,061 $13,762
Operating expenses:
Cost of revenue 2,848 2,675
Research and development 2,283 1,837
Sales and marketing 3,044 2,683
General and administrative 887 718
Total operating expenses 9,062 7,913
Operating income 5,999 5,849
Other income (expense) (8) 367
Income before income taxes 5,991 6,216
Provision for income taxes 1,618 1,927
Net income $4,373 $4,289

Earnings per share:
Basic $0.48 $0.46
Diluted $0.48 $0.45

Weighted average shares outstanding:
Basic 9,084 9,380
Diluted 9,183 9,513

Cash dividends declared per common share $0.13 $0.11

Microsoft Corporation
Balance Sheets
(In millions)

September 30, June 30,
2008 2008 (1)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $9,004 $10,339
Short-term investments (including
securities pledged as
collateral of $1,011 and $2,491) 11,718 13,323
Total cash, cash equivalents, and
short-term investments 20,722 23,662
Accounts receivable, net of
allowance for doubtful accounts of
$168 and $153 9,535 13,589
Inventories 1,640 985
Deferred income taxes 1,974 2,017
Other 3,331 2,989
Total current assets 37,202 43,242
Property and equipment, net of
accumulated depreciation of $6,622
and $6,302 6,552 6,242
Equity and other investments 4,381 6,588
Goodwill 12,291 12,108
Intangible assets, net 1,899 1,973
Deferred income taxes 1,041 949
Other long-term assets 1,751 1,691
Total assets $65,117 $72,793

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $3,351 $4,034
Short-term debt 1,975 -
Accrued compensation 2,138 2,934
Income taxes 514 3,248
Short-term unearned revenue 11,815 13,397
Securities lending payable 1,070 2,614
Other 3,520 3,659
Total current liabilities 24,383 29,886
Long-term unearned revenue 1,662 1,900
Other long-term liabilities 5,478 4,721
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital -
shares authorized 24,000;
outstanding 8,977 and 9,151 61,655 62,849
Retained deficit, including
accumulated other comprehensive
income of $877 and $1,140 (28,061) (26,563)
Total stockholders’ equity 33,594 36,286
Total liabilities and
stockholders’ equity $65,117 $72,793

(1) Derived from audited financial statements

Microsoft Corporation
Cash Flows Statements
(In millions) (Unaudited)

Three Months Ended
September 30,
2008 2007
Operations
Net income $4,373 $4,289
Depreciation, amortization, and
other noncash items 585 435
Stock-based compensation expense 443 333
Net recognized losses (gains) on
investments and derivatives 36 (187)
Excess tax benefits from stock-
based payment arrangements (44) (69)
Deferred income taxes 376 357
Unearned revenue 4,186 3,821
Recognition of unearned revenue (6,044) (4,965)
Accounts receivable 3,985 2,806
Other current assets (558) (235)
Other long-term assets (116) (11)
Other current liabilities (4,552) (1,189)
Other long-term liabilities 700 493
Net cash from operations 3,370 5,878
Financing
Proceeds from short-term debt 1,975 -
Common stock issued 228 646
Common stock repurchased (6,493) (2,930)
Common stock cash dividends (998) (938)
Excess tax benefits from stock-
based payment arrangements 44 69
Net cash used in financing (5,244) (3,153)
Investing
Additions to property and
equipment (778) (510)
Acquisition of companies, net of
cash acquired (377) (5,396)
Purchases of investments (4,246) (5,997)
Maturities of investments 464 330
Sales of investments 7,075 9,120
Securities lending payable (1,543) 196
Net cash from (used in) investing 595 (2,257)
Effect of exchange rates on cash and
cash equivalents (56) 58
Net change in cash and cash
equivalents (1,335) 526
Cash and cash equivalents, beginning
of period 10,339 6,111
Cash and cash equivalents, end of
period $9,004 $6,637

Microsoft Corporation
Segment Revenue and Operating Income (Loss)
(In millions) (Unaudited)

Three Months Ended
September 30,
2008 2007
Revenue
Client $4,218 $4,139
Server and Tools 3,406 2,900
Online Services Business 770 671
Microsoft Business Division 4,949 4,117
Entertainment and Devices Division 1,814 1,929
Unallocated and other (96) 6
Consolidated $15,061 $13,762

Operating Income (Loss)
Client $3,267 $3,388
Server and Tools 1,151 959
Online Services Business (480) (267)
Microsoft Business Division 3,311 2,700
Entertainment and Devices Division 178 167
Corporate-level activity (1,428) (1,098)
Consolidated $5,999 $5,849

Source: Microsoft Corp.

Chinese search engine Baidu saw a whopping 91% increase in the third quarter of 2008. The search engine had been seeing explosive growth leading up to the Beijing Olympics, which occurred during the third quarter.

Baidu expects profits in the fourth quarter to be around 80-85%. In the second quarter, Baidu’s profits increased by 87%.

Here’s the full press release:

Baidu Announces Third Quarter 2008 Results
Wednesday October 22, 5:00 pm ET

BEIJING, Oct. 22 /Xinhua-PRNewswire/ — Baidu.com, Inc. (Nasdaq: BIDU - News), the leading Chinese language Internet search provider, today announced its unaudited financial results for the third quarter ended September 30, 2008. (1)

(Logo: http://www.newscom.com/cgi-bin/prnh/20041011/BAIDULOGO )

Third Quarter 2008 Highlights
— Total revenues in the third quarter of 2008 increased to RMB919.1
million (US$135.4 million), representing an 85.1 % increase from the
corresponding period in 2007.
— Operating profit in the third quarter of 2008 increased to RMB368.3
million (US$54.2 million), representing a 119.1% increase from the
corresponding period in 2007.
— Net income in the third quarter of 2008 increased to RMB347.9 million
(US$51.2 million), representing a 91.4 % increase from the
corresponding period in 2007.
— Diluted earnings per share (”EPS”) for the third quarter of 2008 were
RMB10.00 (US$1.47); diluted EPS excluding share-based compensation
expenses (non-GAAP) for the third quarter of 2008 were RMB10.49
(US$1.54). Costs and expenses related to Baidu’s Japan operations,
incurred in both Japan and China, in the third quarter of 2008 were
RMB32.7 million (US$4.8 million), which reduced diluted EPS by RMB0.94
(US$0.14).
— The number of active online marketing customers during the third
quarter grew to over 194,000, an increase of 7.2% from the previous
quarter.

“I’m pleased to announce solid results for the third quarter,” said Robin Li, Baidu’s chairman and chief executive officer. “As China’s leader in paid search, Baidu has a large and diverse customer base covering numerous industries and sectors. Such diversity gives us great stability and positions us to capture future growth. Companies throughout China are increasingly recognizing the value of Baidu’s paid search as an effective marketing tool and we remain confident in our long-term growth potential.”

Jennifer Li, Baidu’s chief financial officer, said, “The impact of the 2008 Beijing Olympics on our business was in line with our projection for the quarter. We were also able to improve our operating margin again this quarter, highlighting the scalability of our business.”

Baidu recently launched the beta version of an online C2C platform that enables merchants to sell their products and services online via a Baidu- registered store. The new platform complements Baidu’s search business, enabling transaction fulfillment among our users. E-commerce is an emerging industry in China and there are vast opportunities for future growth in the sector. Baidu will continue to focus on providing the best quality experience for Internet users.

Third Quarter 2008 Results

Baidu reported total revenues of RMB919.1 million (US$135.4 million) for the third quarter ended September 30, 2008, representing an 85.1% increase from the corresponding period in 2007.

Online marketing revenues for the third quarter were RMB918.2 million (US$135.2 million), representing an 85.1% increase from the third quarter of 2007. Growth was mainly driven by increases in both the number of active online marketing customers and revenue per customer. Baidu had more than 194,000 active online marketing customers in the third quarter of 2008, representing a sequential increase of 7.2% and an increase of 35.7% from the corresponding period in 2007. Revenue per active online marketing customer for the third quarter increased to approximately RMB4,700 (US$692), a sequential increase of 6.8% and an increase of 34.3% from the corresponding period in 2007.

Traffic acquisition costs (TAC) as a component of cost of revenues were RMB108.8 million (US$16.0 million), representing 11.8% of total revenues, compared to 11.9% in the corresponding period in 2007.

Bandwidth costs as a component of cost of revenues were RMB48.0 million (US$7.1 million), representing 5.2% of total revenues, compared to 6.4% in the corresponding period in 2007. Depreciation costs as a component of cost of revenues were RMB56.9 million (US$8.4 million), representing 6.2% of total revenues, compared to 8.2% in the corresponding period in 2007.

Selling, general and administrative expenses were RMB163.2 million (US$24.0 million), representing an increase of 48.0% from the corresponding period in 2007, primarily due to the expansion of the direct sales force and an increase in customer service staff.

Research and development expenses were RMB78.2 million (US$11.5 million), representing a 109.0 % increase from the corresponding period in 2007, primarily due to an increase in research and development staff.

Share-based compensation expenses, which were allocated to related operating cost and expense line items, increased in aggregate by 211.1% to RMB17.0 million (US$2.5 million) in the third quarter of 2008 from RMB5.5 million in the corresponding period in 2007. The increase in share-based compensation expenses primarily reflects an increase in the number of options granted to employees.

Operating profit was RMB368.3 million (US$54.2 million), representing a 119.1% increase from the corresponding period in 2007. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB385.3 million (US$56.8 million) for the third quarter of 2008, a 122.0% increase from the corresponding period in 2007.

Adjusted EBITDA (non-GAAP), which is defined in this announcement as earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses, were RMB457.3 million (US$67.4 million) for the third quarter of 2008, representing a 104.7% increase from the corresponding period in 2007.

Income tax expense was RMB34.8 million (US$5.1 million), compared to an income tax expense of RMB2.6 million in the third quarter of 2007. The year- on-year increase in tax expenses was due to higher tax rates applicable to some of our PRC subsidiaries as their tax holidays either expired or partially elapsed.

Net income was RMB347.9 million (US$51.2 million), representing a 91.4% increase from the corresponding period in 2007. Basic and diluted EPS for the third quarter of 2008 amounted to RMB10.15 (US$1.50) and RMB10.00 (US$1.47), respectively.

Net income excluding share-based compensation expenses (non-GAAP) was RMB364.9 million (US$53.7 million), a 94.9% increase from the corresponding period in 2007. Basic and diluted EPS excluding share-based compensation expenses (non-GAAP) for the third quarter of 2008 were RMB10.65 (US$1.57) and RMB10.49 (US$1.54), respectively.

As of September 30, 2008, Baidu’s cash, cash equivalents and short-term investments amounted to RMB2.3 billion (US$338.0 million). Net operating cash inflow and capital expenditures on a cash basis for the third quarter of 2008 were RMB482.2 million (US$71.0 million) and RMB85.1 million (US$12.5 million), respectively. A portion of our capital expenditure for the quarter was related to the construction of Baidu’s new campus facility.

Outlook for Fourth Quarter 2008

Baidu currently expects to generate total revenues in an amount ranging from RMB1,025 million (US$151 million) to RMB1,055 million (US$155 million) for the fourth quarter of 2008, representing an 80% to 85% increase from the corresponding period in 2007 and a 12% to 15% increase from the third quarter of 2008. This fourth quarter forecast reflects Baidu’s current and preliminary view, which is subject to change.

(1) This announcement contains translations of certain RMB amounts into
U.S. dollars at specified rates solely for the convenience of the
reader. Unless otherwise noted, all translations from RMB to U.S.
dollars are made at a rate of RMB 6.7899 to USD 1.00, the effective
noon buying rate as of September 30, 2008 in The City of New York for
cable transfers of RMB as certified for customs purposes by the
Federal Reserve Bank of New York.

Conference Call Information

Baidu’s management will hold an earnings conference call on October 22, 2008 at 8:00 PM U.S. Eastern Time (8:00 AM, October 23, Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:
US: +1-617-786-2902
UK: +44-207-365-8426
Hong Kong: +852-3002-1672
Passcode for all regions: 55689997

A replay of the conference call may be accessed by phone at the following number until October 29, 2008:

International: +1-617-801-6888

Passcode: 69587650

Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com .

About Baidu

Baidu.com, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu’s ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol “BIDU”.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook for the fourth quarter of 2008 and quotations from management in this announcement, as well as Baidu’s strategic and operational plans, contain forward-looking statements. Baidu may also make written forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Baidu’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our growth strategies; our future business development, results of operations and financial condition; our ability to attract and retain users and customers; competition in the Chinese language and Japanese language Internet search markets; competition for online marketing customers; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights; the expected growth of the Chinese language and Japanese language Internet search markets and the number of Internet and broadband users in China; and Chinese governmental policies relating to the Internet and Internet content providers. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of October 22, 2008, and Baidu undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Baidu’s consolidated financial results presented in accordance with GAAP, Baidu uses the following measures which are non-GAAP financial measures: adjusted EBITDA, operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures” and “Reconciliation from net cash provided by operating activities to adjusted EBITDA” set forth at the end of this release.

Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain expenses and expenditures that may not be indicative of its operating performance from a cash perspective. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to Baidu’s historical performance and liquidity. Baidu computes its non-GAAP financial measures using the same consistent method from quarter to quarter since April 1, 2006. We believe these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses is that these non-GAAP measures exclude share-based compensation charge that has been and will continue to be for the foreseeable future a significant recurring expense in our business. A limitation of using non-GAAP Adjusted EBITDA is that it does not include all items that impact our net income for the period. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Baidu.com, Inc.
Condensed Consolidated Balance Sheets

September 30 December 31,
(in RMB thousands) 2008 2007
Unaudited Audited

ASSETS
Current assets:
Cash and cash equivalents 2,088,554 1,350,600
Short-term investments 206,360 242,037
Accounts receivable, net 100,193 64,274
Prepaid expenses and other current
assets 109,597 65,996
Deferred tax assets, net 2,587 2,587
Total current assets 2,507,291 1,725,494

Non-current assets:
Fixed assets, net 748,582 678,886
Land use right, net 95,008 96,472
Intangible assets, net 33,814 40,460
Goodwill 51,081 51,093
Investments, net 20,197 15,439
Deferred tax assets, net 17,060 15,716
Other non-current assets 84,394 32,348
Total non-current assets 1,050,136 930,414

TOTAL ASSETS 3,557,427 2,655,908

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other
liabilities 371,745 359,310
Customers’ deposits 357,884 257,577
Deferred revenue 9,149 11,832
Deferred income 633 2,485
Total current liabilities 739,411 631,204

Non-current liabilities:
Long-term payable — 3,000
Deferred income — 332
Total non-current liabilities — 3,332

Total liabilities 739,411 634,536

Shareholders’ equity
Class A Ordinary Shares, Par value
US$0.00005 per share, 825,000,000
shares authorized, and 25,136,147
shares and 25,413,789 shares issued
and outstanding as at December 31,
2007 and September 30, 2008 11 10
Class B Ordinary Shares, Par value
US$0.00005 per share, 35,400,000
shares authorized, and 8,996,842
shares and 8,873,986 shares issued
and outstanding as at December 31,
2007 and September 30, 2008 4 4
Additional paid-in capital 1,254,593 1,171,575
Accumulated other comprehensive loss (127,770) (81,953)
Retained earnings 1,691,178 931,736
Total shareholders’ equity 2,818,016 2,021,372

TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY 3,557,427 2,655,908

Baidu.com, Inc.
Condensed Consolidated Statements of Income

For the Three Months Ended
September September
30, 30, June 30,
(in RMB thousands except for share, 2008 2007 2008
per share information) Unaudited Unaudited Unaudited

Revenues:
Online marketing services 918,179 496,120 802,183
Other services 946 410 428
Total revenues 919,125 496,530 802,611

Operating costs and expenses:
Cost of revenues (note 1, 2) (309,342) (180,704) (280,980)
Selling, general and administrative
(note 2) (163,247) (110,312) (174,213)
Research and development (note 2) (78,231) (37,433) (71,078)
Total operating costs and expenses (550,820) (328,449) (526,271)

Operating profit 368,305 168,081 276,340

Other income:
Interest income 11,375 12,519 10,378
Exchange loss, net (5) (331) (204)
Other income, net 3,009 4,040 7,032
Total other income 14,379 16,228 17,206

Income before income taxes 382,684 184,309 293,546

Income taxes (34,825) (2,580) (28,561)

Net income 347,859 181,729 264,985

Earnings per share for Class A and
Class B ordinary shares:
Basic 10.15 5.35 7.74
Diluted 10.00 5.23 7.62

Weighted average aggregate number of
Class A and Class B ordinary shares
outstanding:
Basic 34,257,974 33,983,137 34,217,081
Diluted 34,786,353 34,763,639 34,786,342

(1) Cost of revenues are detailed as
follows:
Business tax and surcharges (57,288) (30,702) (49,511)
Traffic acquisition costs (108,797) (59,155) (101,693)
Bandwidth costs (48,029) (31,837) (43,012)
Depreciation costs (56,907) (40,654) (57,790)
Operational costs (37,379) (17,979) (27,795)
Share-based compensation expenses (942) (377) (1,179)
Total cost of revenues (309,342) (180,704) (280,980)

(2) Includes share-based compensation
expenses as follows:
Cost of revenues (942) (377) (1,179)
Selling, general and administrative (6,933) (68) (16,484)
Research and development (9,149) (5,027) (11,618)
Total share-based compensation
expenses (17,024) (5,472) (29,281)

Reconciliations of non-GAAP results of operations measures to the nearest
comparable GAAP measures (*) (in RMB thousands, unaudited)

Three months ended September 30, 2007
GAAP Result Adjustment Non-GAAP Results
Operating profit 168,081 5,472 173,553

Three months ended September 30, 2007
GAAP Result Adjustment Non-GAAP Results
Net income 181,729 5,472 187,201

Three months ended June 30, 2008
GAAP Result Adjustment Non-GAAP Results
Operating profit 276,340 29,281 305,621

Three months ended June 30, 2008
GAAP Result Adjustment Non-GAAP Results
Net income 264,985 29,281 294,266

Three months ended September 30, 2008
GAAP Result Adjustment Non-GAAP Results
Operating profit 368,305 17,024 385,329

Three months ended September 30, 2008
GAAP Result Adjustment Non-GAAP Results
Net income 347,859 17,024 364,883

(*) The adjustment is only for share-based compensation.

Reconciliation from net cash provided by operating activities to adjusted
EBITDA(*) (in RMB thousands, unaudited)

Three As a Three As a Three As a
months % of months % of months % of
ended total ended total ended total
September revenues June 30, revenues September revenues
30, 2007 2008 30, 2008
Net cash
provided by
operating
activities 254,870 51% 403,378 50% 482,172 52%

Changes in
assets and
liabilities,
net of
effects of
acquisitions (17,800) -4% (37,893) -5% (45,293) -5%
Income taxes
expenses 2,580 1% 28,561 4% 34,825 4%
Interest income
and other, net (16,228) -3% (17,206) -2% (14,379) -1%

Adjusted EBITDA 223,422 45% 376,840 47% 457,325 50%

(*) Definition of adjusted EBITDA: earnings before interest, taxes,
depreciation, amortization, other non-operating income, and share-
based compensation expenses.

For more information, please contact:

Investor inquiries:

China
Linda Sun
Baidu.com, Inc.
Tel: +86-10-8262-1188
Email: ir@baidu.com

Helen Plummer
Ogilvy Financial, Beijing
Tel: +86-10-8520-3090
Email: helen.plummer@ogilvy.com

U.S.
Thomas Smith
Ogilvy Financial, New York
Tel: +1-212-880-5269
Email: thomas.smith@ogilvypr.com

Media inquiries:

Ceren Wende
Ogilvy Financial, Beijing
Tel: +86-10-8520-6514
Email: ceren.wende@ogilvy.com

Quintura has launched its first site search solution. It’s initially only available in the U.S.

“Web publishers who add Quintura’s free, hosted solution to their websites will realize significant cost savings and generate a new revenue stream,” said Yakov Sadchikov, founder and CEO of Quintura. “Online publishers are given a unique opportunity to engage their users in site search far more than ever before, resulting in additional page-views and click-throughs.”

Quintura has also received its first patent, for a search engine graphical interface using maps and images.

“In beta trials, our solution has proven its benefits to web publishers,” said Dennis Szerszen, CMO of Quintura. “Our statistics demonstrate much higher click-through rates, search utilization, and overall page-views.”

One of the most outspoken investors during the Microsoft-tries-to-buy-Yahoo debacle was Eric Jackson. Mr. Jackson leads a group 146 shareholders that owned a collective 3.2 million Yahoo shares. Those shares were sold last month.

Though Mr. Jackson did approve of the Yahoo-Icahn agreement that expanded Yahoo’s board by 3 members, including Carl Icahn, it apparently was not enough.

Jackson, it turns out, has been right about Yahoo all along. He was one of the first to vocalize fears that Yahoo shares would drop significantly without a Microsoft buy. I, myself, was skeptical. But Jackson was right.

While Yahoo is the number 2 search engine, number 1 in email and the owner of several strong web properties, it’s still not enough. Jackson identifies why when he said, “Leadership matters.”

Writing at SeekingAlpha.com, Jackson explained: “I believed that with better oversight from a new board and management, Yahoo could finally capitalize on its many strengths. We’ve had no significant changes at either level. The company is still muddling ahead with just as many priorities, just as many staff and just as many boxes on the organizational chart. I came to the conclusion that this company is doomed to failure with the current board and leadership.”

YHOO was trading at $12.34 at the time of this post.

Soleil Securities has downgraded Google stock (GOOG) from “buy” to “hold.” Their reasoning is that ad-driven companies will see a slowdown to the weak economy and that Google is already experiencing a slowdown in growth of their ad revenues. Soleil analyst Laura Martin downgraded the price target for GOOG from $580 to $350. GOOG was at $334 at the time of this post.

Google will hold its 2008 third quarter earnings call and webcast next week.

Meanwhile, Local.com has announced a stock repurchase program. The program will last 18 months and the company may buy up to $2 million of outstanding common stock.

“The board of directors has confidence in our company,” said Heath Clarke, Local.com chairman and chief executive officer. “Local.com is a leader in the rapidly growing local search market with both patented and patent-pending technologies. We are gaining significant market share, increasing our organic traffic, growing our direct advertiser base and, as a result, projecting continued high growth.”

LOCM was at 1.89 at the time of this post. Its high is 2.36 and its low is 1.78.

Both GOOG and LOCM trade on the Nasdaq which was up 4.40 points at the time of this post.

Related Reading:
Local.com Partners with Hearst’s White Directory Publishers
Local.com Launches Ratings and Reviews Engine
Google Earnings Top $5.37 Billion in Revenue Q2 2008

In Google’s quest to make sure its search advertising deal with Yahoo goes through, it has added yet another defense to its arsenal: a new facts site. If it sounds political, that’s because it is. The Department of Justice opened an official investigation into the deal months ago. It turns out that when the largest search engine teams up with the second largest search engine to combine advertising, it raises antitrust issues!

On the homepage, Google doesn’t waste any time getting to the three major talking points it touts in support of the deal:

• This is a non-exclusive deal that will strengthen Yahoo!.
• Ad prices will continue to be set by competitive auction.
• The deal is win-win for consumers, advertisers and publishers: more and better ads.

On the right hand side is a link to an in-the-tank New York Times article that drinks extremely potent Kool-aid by practically copying and pasting a previous Google blog post supporting the deal.

Underneath that are quotes from rather large advertisers who also support the deal.

But those who have the most to lose from the deal are small businesses and web entrepreneurs who, rightly or wrongly, have built their success on Google. They fear a sharp increase in prices once the deal goes through.

Google assures that hardly anything will change, save for Adsense ads showing up on Yahoo. They also point to their relationship with Ask.com as proof that the marketplace will remain competitive.

But Ask, despite its slight growth, is not Yahoo. And when it comes to politicking, people have been burned far too often by broken promises. Plus, websites have also been burned by changing algorithms and vague policies.

Right now, in the midst of a significant economic prices, people are looking for stability. And they’re not finding it in huge companies with enormous, quick growth. The housing market is certainly different from the search market, but with sensitive emotions running high, Google just seems insensitive right now, another characteristic of companies “too big to fail.”

I don’t know what they hope is the outcome of this site. Do they hope for a groundswell of support and grassroots letter writing campaigns on their behalf? I just don’t see that happening.

Google needs to continue its lobbying and legal advocacy with the Department of Justice. But unless Google wants to suddenly become more transparent on their algorithms and site penalties, then they should just leave the little guy alone in this effort.

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