Tuesday, August 19, 2008

Piper reiterates rating

Piper Jaffray analysts Gene Munster and Vivian B. Li have an Olympic impact update on Baidu.

The analysts said, "Based on meetings with advertisers in China, we believe the impact of the Olympics on Baidu's business has been in line with Street expectations, and Baidu's September quarter is tracking to plan. We believe the first two days of the games saw a dramatic decline in Baidu search, but traffic has gradually improved from the initial drop."

The analysts also highlighted that the company's September quarter guidance calls for a two-month slow down (July 20th- September 20th) from the Olympics. However, the analysts believe this is a conservative expectation. Instead, they expect "search traffic should return to near normal levels within a week after the end of the games (September 1st)."

Finally, the analysts have a Baidu Japan update. They said, "In line with Street expectations, sources in China indicated to expect revenue from Baidu Japan to begin by the end of 2008, with nominal revenue contribution in 2009." However, Munster and Li are not modeling for any Baidu Japan revenue. Instead, they see Baidu Japan as more measurable in 2010.

Overall, they maintain their Buy rating and $468 price target.

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