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$266.05 52.30 (24.47%)
10/13/2008 4:00 PM

Baidu.com, Inc. (ADR) (BIDU)

CAPS Rating:
***

A Chinese language Internet search provider.

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Avatar NetscribeECommer (75.90) Submitted: 1/09/07 7:44 AM : Outperform Start Price: $122.69 BIDU Score: 146.02

Baidu is the largest provider of Chinese language internet search engine in China. Its services are designed to enable internet users to search and find Chinese language web pages, news, images and multimedia files. Baidu’s other search products and download services includes Post Bar, Baidu Knows, MP3 search, Desktop Search, and Search Index. The company also provides online marketing services in China, through its platform Pay-for-Performance (P4P), which helps its customers to search users, who look for specific product or service information.

Strategically moving, the company has announced its intention to enter Japanese market in 2007. It’s proven strength in non-english language search, high internet penetration in Japan and similarities between the Chinese and Japanese languages, makes Japan an ideal next step for Baidu. Another area in which the company focusing is M-commerce by pushing its offering in the mobile space.

Being the first search engine in China, Baidu enjoys a greater advantage over its competitors, mainly Yahoo and Google, on account of its local content focus and expertise. The online paid search Chinese market is expected to grow by 50% annually to $1.2 billion by 2010 from $117 million in 2005. Increasing dependence on search engines and rapid growth of user generated site content, have enabled brand advertisers to shift towards paid search engines.

The company is well positioned for expected positive trends, considering the greater adoption of paid search by Small and Medium Enterprises (SME) and brand advertisers, the growth of e-commerce and emergence of user-generated content.

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Avatar NetscribeECommer (75.90) Submitted: 4/16/07 5:53 AM

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Baidu currently holds about 60% of the search query market in China. With users spending more and more time on the internet, online advertising's share should continue to grow. As a result the share of online search marketing should also continue to grow as its effectiveness becomes more apparent. Encouraging macro factors such as robust Chinese GDP growth, rising penetration of internet and broadband, greater adoption of online advertising or paid search by advertisers, and fast emergence of small to medium sized enterprises (SMEs) that need easy, affordable channels to reach their audiences are driving Baidu’s growth.

Baidu is the only major internet name that focuses mainly on Chinese language search and has adapted quickly to the ever-changing global Internet environment by rolling out innovative products. China’s online marketing industry has experienced rapid growth in recent years, and iResearch estimates it could reach US$3.3 billon by 2010, a CAGR of 45% versus the 25% estimated for the global online advertising industry in 2005-10. Its Pay for performance has swiftly gained advertisers acceptance in recent years.
Baidu.com has launched its first overseas search engine in Japan as it plans to expand overseas to compete with Google and Yahoo. The website, www.baidu.jp, offers text-based and image-based search options, as well as a user help section and other advanced features. Baidu is racing to build out online library services as to garner a share for a slice of the world's second-largest Internet market. For this, Baidu has already secured a strategic partnership with Peking University Library in Beijing, one of Asia's largest academic libraries, in preparation for the launch of its online book service. Riding on the favorable trends, Baidu is a good long term pick for investors as it is expected that it would continue to generate revenue growth above 27% over next few years.

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