Costs in the quarter grew 86.2% from 2006 to Rmb 132 million as a result of expansion of direct sales force.

Research and Development Expenses

Research and development expenses in the fourth quarter gained 122.7% from a year ago to Rmb 46.5 million as a result of the increase in research and development staff.

Full-year expenses rose 77.6% from 2006 to Rmb 140.7 million

Share-Based Compensation Expenses

Due to increased option grants shared based compensation expenses also advanced from Rmb 7.4 million in 2006 to Rmb 13.3 million.

Outlook

Baidu.com forecasted that in the first quarter of 2008 total revenues generated will rise 93% to 99% to between Rmb 533 million and Rmb 548 million.