Sales Forecast

Baidu predicted first-quarter sales of 533 million yuan to 548 million yuan, which would mean an increase of as much as 99 percent from a year earlier. The forecast missed the average estimate of seven analysts surveyed for revenue of 566.7 million yuan.

"First-quarter sales will be affected by the snowstorms and the holidays," CEO Li said on a conference call today. Internet "traffic typically goes down quite a lot during the Chinese New Year holidays."

China's worst snowstorms in half a century clogged travel in the nation before the Lunar New Year. More than three weeks of storms knocked out power to half the country's provinces and closed road, rail and air routes.

"There's a little bit of concern on the forward outlook," Colin Gillis, an analyst with Canaccord Adams Inc. in New York, said in a Bloomberg Television interview today. Gillis rates Baidu "sell."

Market Share

Baidu's share of the Chinese search market rose to 60 percent in the fourth quarter from 58 percent a year earlier, according to Analysys International. Google Inc's share climbed to 26 percent from 17 percent, while Yahoo's fell to 9.6 percent from 13 percent. Sohu's share dropped to 1.2 percent from five percent, the Beijing-based research firm said.

"Baidu is the dominant search company in China, and no rival is near to overtaking them," Eric Wen, an analyst at BNP Paribas in Shanghai, said before the announcement. He advises investors to buy the shares.

Shen Haoyu, vice president of business operations, will oversee the company's financial operations until a replacement for Chief Financial Officer Shawn Wang is found, Li said. Wang died on Dec. 27 in an accident in China.

China added 73 million Internet users in 2007, making the nation the world's second-largest Internet market after the U.S. according to the government-backed China Network Information Center.