Hello, and thank you for standing by for Baidu’s first quarter 2012 earnings conference call. (Operator Instructions). Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to hand the meeting over to your host for today’s conference, Victor Tseng, Baidu’s Investor Relations Director.

Hello, everyone, and welcome to Baidu’s first quarter 2012 earnings conference call. Baidu’s earnings release was distributed earlier today and you can find a copy on our website as well as on newswire services. Today you will hear from Robin Li, Baidu’s Chief Executive Officer, and Jennifer Li, Baidu’s Chief Financial Officer. After their prepared remarks, Robin and Jennifer will answer your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor Provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC, including our annual report on Form 20-F. Baidu does not undertake any obligation to update any forward-looking statement except as required under applicable law. Our earnings press release in this call includes discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures and is available on our IR website at ir.baidu.com. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will also be available on Baidu’s IR website. I will now turn the call over to Baidu’s CEO, Robin Li.

Hello, everyone, and welcome to today’s call. We are pleased to begin the year with a strong set of results. As always, our excellent performance was driven by our team’s relentless execution. In particular, we achieved a robust expansion of our SME customer base despite a seasonally slow quarter. We see huge opportunities to develop both our SME and large customer bases. And we have been working hard to capture these opportunities. Across a variety of [highlight] platforms, our user experience indicator rose strongly this quarter as well. Underpinning this progress in customer base expansion and user experience is our sustained investment in talent, infrastructure and marketing. In the first quarter, we continued to push forward with our Box Computing initiative. Box Computing embodies our mission for the future of the internet. As part of this, we made good progress on our open data and open application platforms. In March, for example, searches for trending topics and breaking news on Baidu began returning results from all of China’s major (inaudible) platforms. The market has responded well to our ongoing improvements. As of now, we have tens of thousands of registered developer accounts on the open application platform. These developers have created over 70,000 applications that are available to Baidu users. And traffic patterns demonstrate clearly that users are enjoying the easy access to these apps from our platform. Since our personalized homepage feature was launched in September of last year, we’ve continued to make it more convenient for users to enjoy. Feedback has been great, and it’s translating into improved user stickiness on the personalized homepage. The daily clicks number has grown very nicely since the launch last September. Mobile search traffic maintained a strong growth trajectory in Q1. Mobile search is of course central to our overall strategy. Mobile…

Thank you, Robin. We started 2012 with a productive quarter. In order to maintain our leading position in the industry, we sustained a rapid pace of investment in talent, network and office infrastructure while managing operational efficiency. This investment strategy is building a solid foundation for future business progress. Looking forward, we’ll continue this aggressive investment strategy in the quarters ahead. This month, for example, we have embarked on our annual nationwide search engine marketing tour. And in the coming quarters we also expect office construction and network infrastructure spending to ramp up. Now let me go through some of the financial highlights for the first quarter 2012. All amounts mentioned are in RMB unless otherwise noted. For the first quarter, total revenue were RMB4.3 billion, representing a 75% increase year over year. During the first quarter, Baidu had approximately 321,000 active online marketing customers, a 17.2% increase from the corresponding period in 2011 and a 3.2% increase from the previous quarter. Revenue per online marketing customers for the first quarter was approximately RMB13,300, a 49.4% increase from the corresponding period in 2011 and a decrease of 17.6% from the previous quarter. Traffic acquisition cost as a component of cost of revenue in Q1 was RMB331 million or 7.8% of total revenues, compared to 8.2% in the corresponding period in 2011 and 7.9% in the fourth quarter of last year. Bandwidth and depreciation cost as a percentage of revenue in Q1 were 5.2% and 5.5% respectively, compared to 5% and 5% in the corresponding period of 2011. As I mentioned just now, the increase was mainly due to increase in network infrastructure capacity. Selling, general and administrative expenses in Q1 were RMB479 million, an increase of 43.9% year on year, primarily due to the increase in personnel-related expenses. R&D expenses…

The question-and-answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we’ll take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. And your first question comes from the line of Dick Wei of JPMorgan. Please ask your question. Dick Wei – JPMorgan: Hi. Thank you for taking my question. My question is on the guidance. I wonder if you can share some assumptions on the second quarter guidance, maybe first within the second quarter, is the management assuming that May and June will be weaker versus May compared to prior year? And maybe secondly, maybe if you can share some thoughts on the spending by SME versus the large advertisers on Q2, that will be great. Thank you.

Dick, good morning. We have always made our best to make projections. In Q2, we think the sequential pattern is normal. What we have demonstrated in Q1 is we added quite a number of customers accounts, and these accounts are primarily SMEs. And what that really demonstrate is the market potential is huge and our sales team, the kind of work that we have done in the past year, is bearing fruit. We continue to work a lot with the large advertising customers and bring in traditional customers and their allocation, budget allocation onto the Baidu platform. And a lot of work is on the -- in the pipeline. I think both on the SME front and the large customer side we continue to see tremendous opportunity. Month over month between May, June and July, we do not anticipate different patterns as we compare to prior years. Last year in Q2, obviously, it was a very special quarter. As you would recall, in last Q2, there were particularly hot sectors such like group-buying sectors, a lot of hot money is getting into the sector. So, Q2 last year, if you recall, we provided sequential guidance in the range of 32% to 35%. The actual performance exceeded our expectation and came in at 40%. So if you look at the normal pattern of 32% and 35%, that was kind of the ballpark range that we were looking at last year. And building on the second quarter, third quarter, outstanding performance, and the performance in Q4 as well as this past Q1, I think on a very solid high base, this second quarter guidance is a very solid guidance. So this is pattern that we do not -- we’re not seeing anything different and this is a pattern that we’re currently projecting. Dick Wei – JPMorgan: Great. Thank you.

Your next question comes from the line of Jiong Shao of Macquarie Securities. Please ask your question. Jiong Shao – Macquarie Securities: Good morning. Thank you very much for taking my question. Just to follow up on the revenue guidance question. If I look at the year-over-year growth of slightly below 60%, I think this year you haven’t seen anything less than 60% since end of 2009. I was wondering, other than the higher base, could you talk about visibility currently you have in advertising, and particularly in the search-based advertising demand in China? Thank you.

I think we continue to see tremendous opportunity. As you just correctly noted, year-on-year comparison, we do have a large base last Q2. But as we’re seeing into the market segments, whether it’s for SME or large customers that we have built, obviously we see continued momentum in these people, recognizing the search engine marketing platform as a very effective promotional platform for them. So, our sales team is very focused on executing, educating and developing the market as well as servicing the customers. So I think the market potential is there, the execution that we have demonstrated, pretty good track record all along, and we continue to think that we have a very, very significant potential in developing the market. In terms of I think visibility and all that, we do not feel there’s anything that much different. Obviously we have a very diversified portfolio and many, many more business and business sectors and customers to add on the platform. So I think the outlook for us really is continued tremendous potential, and we’re focused on execution. Jiong Shao – Macquarie Securities: Thank you very much.

Your next question comes from the line of Alex Yao of Deutsche Bank. Please ask your question. Alex Yao – Deutsche Bank: Hi. Good morning everyone and thank you very much for taking my question. My question is about your cloud computing strategy. Can you share with us your thoughts on the commercial perspective of the cloud computing strategy? And also, how should we think about the returns on those investment in terms of the cost structure which would be generated from this initiative? Thank you.

Yes. Cloud computing is a very important infrastructure play. With our technology competitiveness, we can build very large-scale infrastructure that allows our developers to build apps upon that. Once -- so we are basically an ecosystem play instead of trying to bet on any of the specific apps. In the future, I think that this model for this would -- very much like a commission-based structure, we will take a cut from all the apps running on our platform. Although this is a relatively longer-term picture, we would be able -- we would want to invest in this and bring in all the users so that their behavior, their data can be used by all kinds of different applications. In the future, we think this will pay off based on our infrastructure and our monetization capabilities we have built over the past like 10 years. Alex Yao – Deutsche Bank: Thank you. And how will this impact the cost structure?

[Still] building our business plan, it’s not going to be a sudden rise or sudden change for the cost structure.

Alex, I think the way to think about it is, if you look at the past two years of investment pattern, and I have stressed that we will continue this investment strategy, so the approach will be consistent, and this is part of our core business. As Robin mentioned, it’s very important for us to set the solid foundation as we develop forward and to really solidify our position in the marketplace. And this is part of overall core business and the investment or related costs, if you're thinking about it, you can look at the patterns from the past two years and that pattern will sustain. Alex Yao – Deutsche Bank: Got it. Thank you very much.

Your next question comes from the line of Jin Yoon of Nomura Securities. Please ask your question. Jin Yoon – Nomura Securities: Yeah, thank you for that. A couple of questions. Your traffic acquisition cost as a percentage of revenue, it looks like it declined a little bit this quarter. Is that -- has there been any material changes in how you allocate costs to -- how you share revenues with the traffic partners again, or it’s just a function of the fact that contractual ads are probably not as growing as fast? So, how should we look at that? And second of all, just on your customer deposits, have been relatively strong indicator of revenue. It’s pretty strong this quarter. Does that mean that things should be going strong going forward after these new SME customer expense to ramp up after this quarter? Yeah, I’ll stop right there. Thanks, guys.

On your first question related to TAC, what you all have seen in Q1 is a normal fluctuation. As we have indicated in the past, the TAC expense that we are deploying today has more to do with the new product promotion that we’re pushing to the network of union partners. The composition of the TAC is shifting more towards the new product promotions rather than the traditional traffic acquisition costs. And we are, as you know, we have been working on the contractual ads product. And the product itself is making good progress. And obviously this is not an overnight product that you should see significant differences, and therefore I would point to the TAC as a normal fluctuation compared to the prior quarters’ patterns. In your second question with regards to customer deposits, yes, as we have recruited more customers and these people would be putting their deposits with us, it does show that the customers are having confidence in our platform, are willing to spend with us. Obviously, as we execute on helping them spend on their promotional dollars, we help them along the way to generate a kind of the ROIs that they desire. So, it is a good indicator, it does not directly correlate with revenue projection. But this is definitely a solid cash base and customers’ confidence in us that we’re having. So this is a solid number that’s good to have.

Your next question comes from the line of Alicia Yap of Barclays. Please ask your question. Alicia Yap – Barclays Capital: Good morning, Robin, Jennifer and Victor. Thanks for taking my questions. Just quickly, can you remind us the top five customers and which verticals are showing stronger growth and which ones are facing more challenges and cutting back their spending, particularly in the first and second quarter this year? Thank you.

Our top sectors, five sectors, for Q1 are namely medical/healthcare, machinery equipment, education, travel and software and games. And they are because Q1 is a seasonally special quarter, so there is a slight change in the top sectors. And the other normal players that would typically show up here are business service and franchising, and there are some seasonal patterns as Q1 comes in the picture. So, the mix of the top sectors are not really changing. I think particular around the B2C side, we continue to see very strong growth, and because the fact that we’re seeing these sectors -- these sectors continue to be the top, you can expect that they are all enjoying very strong growth. And obviously, as I said, B2C is stronger than B2B. Alicia Yap – Barclays Capital: Okay, great. Thank you.

Your next question comes from the line of Eddie Leung of Merrill Lynch. Please ask your question. Eddie Leung – Merrill Lynch: Good morning. Thank you for taking my questions. I have two questions. The first one is about your search profit. So, in terms of search query growth, have you guys seen the impact from a slowdown in Chinese internet user growth? And then my second question is related to the contribution from Qunar. Could you discuss a little bit about the changing contributions to your top line throughout the past couple of months from Qunar? Thanks.

On the user traffic growth, we have seen very strong traffic growth over the past few quarters. It’s been very consistent. So, although the internet user base in China is quite large and the growth could slow down, but our traffic not only depends on the number of new users coming in everyday, it also depends on the time spent by each user. Because information or search is so fundamental, so essentially to everyone’s ordinary life, I think people increasingly depend on us to find information. That’s why we’re staying very healthy growth in terms of user traffic or in terms of queries over the past few quarters.

And Eddie, on your question related to Qunar, if you look at our recently released 20-F, that gives you an indication of what Qunar’s level of revenue looks like. And because we acquired Qunar and we’re consolidating the results, their revenue number is included in our total number. But the absolute number itself is so immaterial, it is really a very small part of the overall revenue that we’re generating. Eddie Leung – Merrill Lynch: Got that. Thank you.

Your next question comes from the line of Catherine Leung of Goldman Sachs. Please ask your question. Catherine Leung – Goldman Sachs: Hi. Good morning. I was wondering if you could elaborate on the particular innovative marketing efforts you mentioned in the opening remarks which have accelerated your SME customer base growth, given I think you have regularly organized these marketing events, tours over the past few years. Thank you.

Yeah, we do have this kind of nationwide marketing tour every year. What’s different this year is that we implemented a certain incentive for the sales to sign more customers. We implemented a structural change in our sales force last year, which means we separated the inside sales from outside sales, people with -- there are certain dedicated team would go to the customer site and do an onsite visit and the other team would do calling. So this kind of structure allows us to sign up new customers more efficiently. Last year, because the large customer grow so rapidly, we were not able to spare a lot of resources to take care of the smaller customers. And starting from this year, we are saying that we were able to sign up a lot of new accounts from the second-tier and third-tier cities. Catherine Leung – Goldman Sachs: Okay, great. Thank you.

Your next question comes from the line of Richard Ji of Morgan Stanley. Please ask your question. Richard Ji – Morgan Stanley: Yeah, good morning, Robin, Jennifer and Victor. Can you elaborate a little more on your mobile search initiative? Clearly that has been very fast-growing and likely going to be a key catalyst going forward. When should we expect some meaningful revenue contribution? And can you also comment on the potential margin profile for the mobile search relative to PC-based business?

Rick, what we are saying is that mobile search traffic have been growing much, much faster, especially for those smartphone-based mobile searches. We are aggressively investing in improving the user experience for our mobile search and we have seen very good results. What’s different from the mobile is that at this stage we need to probably share some revenue with the handset manufacturers or other distribution channels when we ask them pre-load our search, in most cases, it’s a default search on those phones. The monetization capability on mobile is relatively low. It’s still much lower than PC-based search queries, but we started to work on the monetization capabilities for our mobile traffic. We have seen very encouraging results. So, going forward, you can expect that the revenue contribution from mobile, while continuing to go up, but probably for the rest of the year, still going to be a very small percentage. It’s kind of early to talk about the margin difference because the overall traffic -- overall revenue, rather, is still small. Once we have established the dominant position in mobile search, we may not need to pay out a lot of channel distribution costs in the longer term. So I don’t think it’s so important to focus on margin right now. Richard Ji – Morgan Stanley: Yeah. Thank you, Robin.

Yeah.

Your next question comes from the line of Wallace Cheung of Credit Suisse. Please ask your question. Wallace Cheung – Credit Suisse: Hi, good morning. Thanks for taking up my questions. Also questions relating to mobile internet. I’ve seen from some third-party company to track sort of the Baidu market share in mobile internet. It seems lower than the PC-based. Can you explain a little bit the reasons behind why there’s some discrepancy between PC and mobile side? Is it related to, say, Baidu’s strategy in the mobile browser as well? Thank you.

I think there are a number of reasons. First is that I don’t think there is an incredible market intelligence on the mobile search market share. A lot of those numbers are really based on number of files transmitted to certain mobile search sites. Some of the sites actually host some very large files such as music files on their sites. So, just the traffic share or number of files is really misleading when you think about the mobile search market share. Our current estimation is that we should have over 50% of the mobile search market at this point. And of course, as I mentioned before, mobile search is growing very, very fast, and we just started to invest aggressively to improve the user experience. That brings for the second reason, which is that we were not so focused on mobile before because we started this kind of early before there were no healthy competition among the carriers and the mainstream phones were feature phones which was very hard for users to use to surf the internet and search. This has changed, so we will start to focus on that too. Thirdly, I’d like to point out that users would search more given that they have a phone that can have access to internet too. So we do expect that the vast majority of our existing users on PC, you know, China has more than 500 million users, and we have a very large reach or coverage for this kind of users. When we have certain type of information needs, it’s very natural for them to pull out their phone, and a PC is not in front of them, to find information. So, net-net, we expect to see faster growth because of the mobile search phenomenon. Wallace Cheung – Credit Suisse: Just one quick one is, [are you saying] your market share in the smartphone is higher than the feature phone? Thank you.

I really don’t know. We don’t have any credible third-party data, and it’s very hard for us to get the number from other players. What we are saying is that mobile search has been growing much faster than PC and the smartphone traffic is growing much, much faster than the mobile search, the overall mobile search traffic. Wallace Cheung – Credit Suisse: Thank you very much.

Yeah.

Your next question comes from the line of Ravi Sarathy of Citi. Please ask your question. Ravi Sarathy – Citigroup: Good morning. Thank you very much for taking my question. Got a question about your vision for the personal cloud service that you spoke about in your opening remarks. I was wondering what your view is of how broad that cloud service will ultimately be in terms of the user experience, whether you see it encompassing as well as photos, music, video, and other types of data storage and sharing. Secondly, one thing is that would encapsulate streaming service. And when you talk about sharing with friends for the personal cloud service, I was wondering if that is around sharing with people who are already registered or [additionally] integrating with other social networks and social sites in China today. Thank you.

Yeah, like I mentioned before, personal cloud service is really an infrastructure play. We have a very large infrastructure that can enable users to store their data content or apps on the cloud side at a cost and in cost to us, because in most cases it’s free to the users, very cost-effective. This kind of infrastructure can support a lot of apps. For example, we recently launched the Net Disk of Baidu WangPan that gives people virtually unlimited storage for them to store whatever they want. But there are a lot of other apps that can take advantage of this infrastructure. For example, PhotoWonder, when people take pictures using their phones, they can actually store the data on the cloud side. There are a lot of other Baidu services from Baidu Knows to post a lot of user-generated content. Anyone can choose to store certain part of the content as their personal content so they have a sense of owning some data. There are a lot of other developers, third-party developers, who can develop apps and taking advantage of this storage infrastructure, and including sharing this kind of data among the social networks they prefer, it could be Baidu social product, any other popular product that’s available on the internet. So, PCS is really an infrastructure play. Ravi Sarathy – Citigroup: Understood. And a quick follow-up, somewhat related to that, around mobile, and the pre-installation of the Baidu range of apps including search, I was wondering if you can update us on the percent of Android handsets as well as the development you have around iOS for the pre-installed Baidu search and other apps?

Right now, Android is growing much faster, I think it’s -- the installed base is much larger and will become even larger because based on the market, current market analysis, we expect a lot of -- on the order of probably 100 million new Android-based phones becoming available this year. Right now, about 80% of the Android phones, branded Android phones, come with Baidu search preloaded. So we are very happy about the growth. Ravi Sarathy – Citigroup: Thank you very much.

Your next question comes from the line of Gene Munster of Piper Jaffray. Please ask your question. The line of Gene Munster is open. Gene Munster – Piper Jaffray: Yup. Thank you and good morning. And Robin, can you talk a little bit about customer ads, they’re better than expected, ARPU was a little bit weaker, maybe a little bit about that trend going forward as you put on more advertisers. Are these smaller businesses that might have a lower revenue opportunity? Or in general, how should we think about ARPU relative to customer ads over the next year or two? Thanks.

Yeah. I would think -- I would say that over the past couple of years, large customers generally grow faster than SME, as we talked about during the past few conference calls. That’s because all of a sudden a lot of the traditional advertisers plus some of those [hot] sectors, group buying, they all came in and spent a lot of money with us. Starting from this year, we think that the customer mix will become more normal in the sense that a lot of the SMEs continue to sign up and we were able to spare a lot of resources to take care of them. ARPU had a slight drop, it’s pretty much because of seasonality. Q1 is always the slowest quarter for us. So, over the next couple of years, I think we should see very healthy growth in number of customers, as well as ARPU, it’s just that the customer mix may shift a little bit, those larger customers, existing larger customers may not be able to double their spending on us every year, but we do expect both the customer numbers and ARPU to grow very nicely. Gene Munster – Piper Jaffray: Okay, great. Thank you.

Your next question comes from the line of Cynthia Meng of Jefferies. Please ask your question. Cynthia Meng – Jefferies & Co.: Good morning. I have two questions. Number one is related to IGE. Is the RMB46 million loss from equity investment mostly from IGE? And can management give the outlook for the next few quarters? We also would like to hear from Robin your view of ongoing online video consolidation and what do you think this has implied to [TE] related loss? Will that [TE] loss narrow? The second question is related to Baidu’s strategy on the operating system. We read from a recent news that Baidu is cooperating with Dell and also Foxconn to manufacture a handset based on the in-house OS. Can management give some more color on this? Thank you.

On your question related to the loss or gain from the equity cost accounting method, what’s included in this quarter’s number mainly are two items. IGE is part of it, and there is also an element related to the Baidu Youa spinoff. If you read our 20-F, we obtained funding for Baidu Youa and we recognized a gain related to the transaction. So, on a going-forward basis, if the entity is loss-generating, we will pick up the related loss items. This quarter, the total amount is in the range of RMB45 million and I expect this to be the range going forward on a consistent basis for the remaining quarters. Maybe slight variations quarter over quarter, but that’s largely the range that I'm looking at.

Yeah, on the outlook for online video, I have mentioned this before, we see tremendous amount of user demand for video content. A lot of users come Baidu and search for video content. Our main goal is to satisfy this type of user need. We invested in IGE so that they can bring us very high-quality, professionally-produced licensed content to our users, and we will continue to support that. We also opened to other type of -- other sources of online video content. In my mind, the online video business is not really a winner-take-all business. A lot of players have chances to benefit from this. On the one hand, demand is huge; on the other hand, a lot of people have the capability to bring high-quality content online. So we are very optimistic about the future of online video. On the operating system thing, we continue to work on Baidu Yi which is a platform for mobile handset manufacturers to preload. It comes with a lot of Baidu-flavored products, look and feel. And we worked with Dell before and working with other manufacturers for future release of mobile phones. Cynthia Meng – Jefferies & Co.: Thank you. I have a follow-up question for Jennifer. Jennifer, you said the RMB45 million loss per quarter is the estimate for loss related to Youa. I assume this does not include [TE]-related equity loss. And if it doesn’t, can you give some guidance as to what we should expect on [TE]-related equity loss going forward? Thank you.

Yeah. What I said included in the line items are mainly two things. One is Youa and one is IGE, as I indicated last quarter, with the cash contribution we’d put into IGE. On a going-forward basis, we’ll pick up our share of the financial results related to [TE]. So, included in this number, also has IGE’s number, but I just wanted to highlight that there is a new item related to Youa that’s also included in this number. And going forward, largely, they, you know, if business patterns is holding constant, this is the general range. You might see some variations quarter over quarter. Cynthia Meng – Jefferies & Co.: Great. Thank you.

Your next question comes from the line of Wendy Huang of Royal Bank of Scotland. Please ask your question. Wendy Huang – Royal Bank of Scotland: Thanks for taking my questions. First, while you are pushing into tier 2 cities and modify your sales incentive systems, what kind of measures will you put in place to avoid the risk and prevent (inaudible) happening again? And secondly, the capital expenditure seems to have come down dramatically in Q1 on both yearly basis and sequential basis. How should we view this change going forward? And lastly, you booked -- mobile advertising revenue, I wonder if your bookings net revenue after distribution cost or you record the gross revenue. Thank you.

I’ll take on the first and Jennifer will answer the rest part of the question. Customers in the tier 2 cities, as the vast majority of our SMEs in China reside in the tier 2 or tier 3 cities and they start to realize the power of the internet marketing or search engine marketing, and we are just trying to satisfy their needs and help those SMEs in those regions to really take advantage of our platform. So it’s very natural that we will start to shift some of the resources to the tier 2 cities. Another point worth noting is that the growth rate for the tier 2 areas are actually faster than the tier 1 cities. So, it’s only natural that more and more customers come from those areas.

And on the question related to CapEx, I mean, CapEx typically, they come in pretty choppy quarter over quarter. So, do not, as I indicated, we are having consistent patterns when it comes to infrastructure investment, and I also highlighted, other than data centers, we’re also investing in office space, so you should expect the CapEx to pick up in the upcoming quarters. Typically what’s included in the CapEx, as you well know, is servers-related, and I think additional spending will occur this year related to constructions for infrastructure, as well office space. Related to your question on the mobile revenue, it is a small, very small part of the overall revenue picture today, and today we’re recording the mobile revenue on a gross basis and any revenue-sharing is going through the TAC line item. Wendy Huang – Royal Bank of Scotland: Okay. Thank you.

Your next question comes from the line of Fawne Jiang of Brean Murray. Please ask your question. Fawne Jiang – Brean Murray Carret & Co.: Good morning. My question is actually on the general advertising outlook for 2012. It seems advertising [overall] in China has a pretty slow start, with some [soft medical] and political uncertainty. I think our talk with advertisers seem to suggest 2012 could be second half loaded. I just wonder whether you see similar trend with your business. So it would be extremely helpful if you could comment on the budget allocation trends for your big advertisers first half versus second half. It seems that you had a pretty good start on the small and medium enterprises. But we want to get more color on the big advertiser side.

Yeah, I’ll say that things are kind of different from the SME side to the large advertiser side. For SMEs, they are not that affected by this kind of budget allocation. Typically their main way of doing promotion, online promotion, is through Baidu and it’s very much performance-driven. If we can deliver the right results, they will spend on us. For the larger advertisers, the story is a little bit different in the sense that they generally have an annual budget for advertising and then they allocate a certain portion of that budget to search or to Baidu, and we yearly sign framework contract with them at the beginning of the year. We’re seeing very good acceptance from the large customer or large advertisers, but what we have heard is that many of the traditional advertisers are not increasing their overall advertising budget but they would like to increase the percentage of their budget allocation to online platform, especially on Baidu. Fawne Jiang – Brean Murray Carret & Co.: Great. So I guess the question is, is it fair to say we might see some recovery or improvement overall when we head towards second half of the year?

Our current release -- it’s very possible. As I have -- as you know, that Q1 is seasonally slow, and we signed a lot of framework contract with the large advertisers. They committed to spend a lot of money, I mean, a very healthy growth year on year. So, the second half should look better. Fawne Jiang – Brean Murray Carret & Co.: Got it. Thank you very much, Robin.

Yeah.

We’re now approaching the end of the conference call. I would now turn the call over to Baidu’s Chief Executive Officer, Robin Li, for his closing remarks.

Yeah, once again, thank you for joining us today. And please do not hesitate to contact us if you have any further questions.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.