April 25 (Bloomberg) -- Baidu.com Inc., operator of China's most-used search Web site, posted a 71 percent increase in first- quarter profit after surging Internet use in the nation spurred companies to buy more online advertising.

Net income rose to 146.6 million yuan ($21 million), or 4.22 yuan per American depositary receipt, from 85.5 million yuan, or 2.47 yuan, a year earlier, Beijing-based Baidu said today in a statement. Sales more than doubled to 574.4 million yuan, topping the 519.9 million yuan average of 13 analysts' estimates compiled by Bloomberg.

Chief Executive Officer Robin Li lured more users to the company's Web site by adding services such as the ``Baidu Hi'' Internet chat software to maintain its twofold market-share lead in China over rival Google Inc. Baidu and Google together had almost 90 percent of the Chinese search market in the first quarter, according to researcher Analysys International.

``They are doing well,'' Walter Price, a portfolio manager at RCM Capital Management in San Francisco who helps oversee $3 billion including Baidu ADRs, said before the release. ``We cut back on the stock in January and then recently began building it up'' after visiting the company in March, he said.

Baidu's ADRs fell 2.2 percent to $342 on the Nasdaq Stock Market before gaining 3.2 percent in extended trading. The shares have fallen 12 percent this year, compared with a 21 percent decline in Google's shares.

Market Share Gains

The company expects customer spending to rise in the current quarter from the previous three months, Li said in a conference call with analysts today.

Baidu's revenue per customer fell to 3,600 yuan in the first three months of the year from 3,700 yuan in the fourth quarter as snow storms limited marketing opportunities, Li said.

The company will ``continue to ramp up'' employee numbers, after adding about 500 workers in the first quarter for a total of 6,700, Chief Financial Officer Jennifer Li said.

The Olympics in Beijing from August may ``negatively impact'' third-quarter sales because it might change Web ``user traffic patterns,'' Li said.

Baidu's share of the Chinese market rose to 60.7 percent in the first quarter from 60.1 percent in the fourth, Beijing-based Analysys said. Google's share climbed to 26.8 percent from 25.9 percent, while Yahoo! Inc.'s fell to 8.3 percent from 9.6 percent, the researcher said.

Biggest Market

China passed the U.S. to become the world's biggest Internet market by users, Google Chief Executive Officer Eric Schmidt said in Beijing last month.

The Asian nation was home to 210 million Internet users at the end of 2007, more than the combined populations of France, Germany and the U.K., according the China Network Information Center, a government agency that licenses online domain names.

Universal Music Group, Sony BMG Music Entertainment, and Warner Music Group Corp. sued Baidu in February, alleging the Internet company infringed copyright by helping users find links to pirated music on third-party sites. Baidu is the ``biggest roadblock'' to creating a market for legal digital music in China, Lachie Rutherford, Asia Pacific Chairman of the International Federation of the Phonographic Industry, said this month.

``Baidu has always been an advocate of improving the protection of copyrights on the Internet,'' the Web company said in an e-mailed statement, declining to comment on the lawsuit.

To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net

Last Updated: April 24, 2008 22:38 EDT