Thursday, October 30, 2008

E-commerce site details

Baidu's ecommerce website recorded more
than four million pageviews, while 1.99 million items of goods
went on sale on it on Tuesday, when the
consumer-to-consumer (C2C) website was launched, the
company said on Thursday. A spokeswoman also said the
aim was to overtake Taobao in 3 years. In contrast, Taobao
had around 200 million daily visitors last year.

Wednesday, October 29, 2008

Elink alliance

Beijing-based online solutions provider China Business
Elink launched an Internet advertising alliance with
nearly 100 partners including Baidu, Sina, and Tencent,
on October 28, said an Elink employee surnamed Chen.
Alliance members will promote Elink adverting product
Webdou (, an interactive tool that offers
prizes to users that click on ads and answer
company-related questions correctly. Twenty-five percent
of Webdou revenue will go to alliance members, while Elink
will take 25% as profit and 50% as prize purchasing capital.
Webdou, currently in invitation-based testing, is scheduled
for official release on January 1, 2009.

Baidu Hi e-commerce version

Baidu released a customized e-commerce version of its
instant messaging software "Baidu Hi" on October 29,
reports Sohu. The version adds pictures and
information for products on Baidu's e-commerce
platform, "Youa," and allows users to login to the
platform, publish products and manage shops from
the Baidu Hi main window. According to a post in
Sohu's IT Club, a former vice president from
Shanghai-based online payment service provider
99Bill and his team have resigned to join Baidu's
online payment tool "Bai Fu Bao."

Baidu released a web version of Baidu Hi for users of
its blog "Baidu Space" on October 23. Space users can
click on the Baidu Hi logo in another user's blog page
to open a chat window, without downloading Baidu Hi

Alibaba terminates contract

Alibaba's b2b business officially notified Baidu on October 10
of its intention to terminate its advertising contract and
remove advertisements from Baidu's sponsored
links in the near future, reports plans to use a "healthy and efficient" platform
for promotions and will not rule out the possibility of
cooperating with search engines including existing partners
Google and Yahoo in the future, said the report quoting an employee.

UN Global Compact

Chinese search engine Baidu (BIDU) officially announced that it
has committed to be a member of the United Nations Global
Compact to boost its daily management on corporate social
responsibility. Liu Meng, the China-based UN Global Compact
network manager, told local media that Baidu is one the first
Chinese Internet companies to join the Global Compact. Now
the Global Compact has more than 180 members in China,
including Sinopec, Petro China, China Mobile and Haier. The
participation of Baidu will work as a model to drive more
Internet companies to bring CSR system construction into
their strategic planning and to promote sustainable
development of the industry. The UN Global Compact is a
strategic policy initiative for businesses that are committed
to aligning their operations and strategies with ten universally
accepted principles in the areas of human rights, labor,
environment and anti-corruption.

By joining the Global Compact, Baidu is committing to the ten
principles in the areas of human rights, labor, the environment
and anti-corruption laid out by the initiative. In the past,
Internet search engines like Google and Baidu have come
under international pressure for amending
and obfuscating their search engine results within China, which
some people overseas believe is immoral and unethical. In
addition, Baidu has come under attack in the past 18 months
for allowing illegal music downloads via its search engine links.
Though the Global Compact does not address intellectual property
rights or freedom of information directly, how Baidu's business
processes will change now that its has committed to such lofty
universal ideals as "respect [for] the protection of internationally
proclaimed human rights" is mostly unclear. The only clue comes
from Robin Li, CEO of Baidu, and what he stated in his
commitment letter to join the organization: "We are committed
to making the Global Compact and its principles part of the
strategy, culture and day-to-day operations of our company,
and to engaging in collaborative projects which advance the
broader development goals of the United Nations, particularly
the Millennium Development Goals. Baidu will make a clear
statement of this commitment to our stakeholders and the
general public."

Getting into the Global Compact does not automatically
afford Baidu an unconditional lifetime membership. Indeed
it is quite possible for the company to be dumped
from the initiative, as in July 2008 the United Nations Global
Compact Office announced that 630 companies, including
22 Chinese companies, have so far been removed from its list
of participants for failure to communicate progress. The
delisting of companies is part of ongoing efforts by the
UNGC Office to enhance the accountability and credibility
of the initiative, so Baidu must now stay vigilant in its dealings
with all of its stakeholders to ensure conformity and
compliance with the Global Compact guidelines.

Thursday, October 23, 2008

S&P reiterates hold posts third quarter earnings per American
Depositary Share (ADS) of $1.47 vs. $0.70, well above our
$1.15 estimate. Revenues rose 85%, in line with our forecast.
The company's operating margin was also notably higher than
our projection, reflecting scale in the business. Baidu indicated
its businesses have not been materially impacted by the global
financial crises, but noted that certain export customers have
been adversely affected. We are raising our per-ADS profit
estimates for 2008 to $4.62 from $4.23 and 2009 to $6.79 from
$6.46, and setting an 2010 projection of $9.93. Our 12-month
target price remains $300. /S. Kessler

Canaccord Adams maintains sell rating

Price target lowered from $265 to $190.

Canaccord analyst says, "We respect Baidu’s position
as a search leader in one of the most important global
markets, but concern that a slowing global macro may
spill into domestic activity in China – coupled with the
potential for downward estimate revisions for upcoming
historically weak MarchQ – causes us to lower our price
target. BIDU continues to trade at a premium valuation
to the group and while efforts to control costs to drive
EPS were effective in the SepQ, we expect that growth
investors may have concern on several slowing metrics."

Citi positive

Citi Investment Research analyst Jason Brueschke
expects a strong finish to the year for the Beijing-based
company. He rates the stock "Buy." "Baidu (revenues) are
wholly domestic and derived from an extremely broad
customer base, offering investors a highly diversified and
hence less risky (revenue) stream," he wrote in a note to
investors.That said, he added Baidu is a pure advertising
company, and its revenue is correlated with the health of
the underlying Chinese economy -- which is slowing.

Web version of Baidu IM launched

The launched product is the Web version of Baidu’s instant
messenger. Baidu’s IM, launched in March this year, shares
the same name with Baidu space and tightly integrated with it.

The web version is quite simple. It doesn’t show you a buddy
list. Instead the user's name has to be entered manually, after
clicking a button the upper left side of the screen to start
the chat.

Radio channel alliances

Baidu's radio alliance has partnered with more than 100 radio
stations in nearly 30 provinces and cities, including 13 state-run
stations, since its release in late March, reports Hexun. Baidu
updated its radio channel on October 22 to add program
recommendations and interactive online functions, said the

Baidu partnered with 15 domestic radio stations including
China Radio International (CRI) to launch its radio alliance and r
adio programming site (

Susquehanna maintains Positive rating

Susquehanna maintains a Positive rating Price target increases
from $305 to $320.

Susquehanna analyst says, "Yesterday, Baidu reported an
almost flawless quarter...We expect 4Q EPS to benefit from
continued top-line growth, solid margin, as well as a one-time
gain from outsourcing its video channel...Management
demonstrated strong confidence in Baidu's growth potential,
but did not comment on potential impact from macro slowdown
in China in 2009. We believe investors should react to the
earnings results in a constructive manner, as the stock is
trading at 25% lower than its price post 2Q results, and
the company has met growth targets in 3Q and 4Q."

iResearch: Baidu search share at 73.2%

Affected by the Beijing Olympics, webpage search requests of, the biggest Chinese Internet search service provider
in the world, took a nose dive in this August but reversed the
trend by increasing 30% in September, according to the
latest report from IT market research firm iResearch.

Total webpage search requests in China hit 37.19 billion times
in the third quarter of 2008. Baidu retained the top spot by
taking up 73.2% of the market. Google came second with a
market share of 20.8%.

Industry analysts point out that the dominance of Baidu
in China can hardly be shaken and its market share may
be higher than statistics of iResearch.

The survey conducted by iResearch focuses on household
and corporate users and doesn't include search traffic generated
by users in Internet cafes.

Latest numbers indicate that about one third of Chinese Internet
users are getting access to the Web from Internet cafes.

RBC positive on results

RBC notes that BIDU reported 3Q08 with in-line rev
and EPS beat. Pro forma op margin rose to 44.7% as
the co right-sized some of its TAC payouts and realized
cost efficiencies. Despite mgmt's comments to the
contrary, they do believe the global slowdown is impacting
top line growth. And as was the case with GOOG, search
may be more resilient to a downturn, but it is not immune.
Firm did not note anything that would impair their investment
thesis, and Baidu is displaying the inherent leverage in its
business model. Firm raises tgt to $387 from $384.

Wednesday, October 22, 2008

Yanhong Li denies LG has stopped advertising on

Categorically states the report that LG was heeding
the music consortium's boycott call of Baidu, was

The original report.

Analysys: Baidu's revenue share down a bit

In the three months ended Sept. 30, Baidu had 63.4% of
China's search-engine market by revenue, down from 64.4%
in the second quarter, Beijing-based Analysys said in a

At the same time, Google's share of China's search-engine
market rose to 27.8% from 26.1% in the second quarter.

Competition in China's search-engine market has been
rising, Analysys said, with Chinese company Baidu
adjusting its multi-development strategy and Google
implementing its localization strategy in the third

In the third quarter, total search-engine revenue in
China rose 78% from a year earlier to CNY1.46 billion,
slowing from 87% growth in the second quarter, as
per Analysys.

Advertising spending fell because some companies halted
operations during the Beijing Olympics in August, while
small- and medium-sized enterprises lowered their
advertising budgets due to the global economic turmoil,
the report said.

Distant third-place contender Yahoo China continued to
lose ground, with its market share falling to 4.7% in
the third quarter from 5.5% in the second quarter.

Monday, October 20, 2008

Closed Beta version of e-commerce platform released

Baidu released the closed beta version of its e-commerce
platform with over 1 million products from
10,000 pre-approved sellers at on October 18,
reports Chinabyte. Sellers who upload more than 100
products before the platform's official launch will
receive a preferred seller designation, said the report.
An additional 50,000 users from other Baidu communities
will be allowed to make purchases on during closed
beta, and their account histories will not be deleted after
testing, said the report.

Susquehanna cuts price target to $305

Susquehanna: "We have become cautiously optimistic
from optimistic on the Chinese online ad industry,
when factoring in a significant slowdown in the
Chinese macro economy. We have not turned bearish
yet, because online ad remains as a market
share-gaining story. In five years, online ad will
likely grow to 15% of total ad spending in China
from 6.5% in CY08, and search will account for ~70%
of total online ad from 43%. We believe Baidu will
benefit from businesses being more capable of doing
business online, and its C2C initiative should bring
forth five monetization opportunities. That being
said, Baidu faces challenges from competitor
Google. Taking these factors into consideration,
we are lowering our forecasts for CY09, maintaining
a Positive rating, but cutting our price target to
$305 from $440."

Streaming music channel

Baidu introduced a new channel yesterday, entitled
"New Song Debut" as part of its continued attempts
at working out cooperation models with record
companies. Baidu is working with the Emperor
Entertainment Group, Music Nation, Rock Records &
Tapes, Ocean Butterflies International, Huayi
Brothers, B in Music, and EMI to release 9 albums
from 9 artists including JJ Lin and Xu Wei. The
new channel offers only streaming functionality
and no downloading.

Bullish call by JP Morgan

Expect good Q3 numbers: around top-end of its guidance
range. We believe Baidu executed well during 3Q08, despite
negative impacts from the Olympics and macro issues. We
expect Baidu to report numbers around top-end of its
guidance range (US$132M-US$136M) vs. consensus
forecast of US$133.6M.

Margins should be inline with historical range.
TAC (traffic acquisition cost) should be back to 13-14%
level in 3Q08, up from the surprising low 12.7% in 2Q08.
We maintain our diluted EPS forecast of US$1.25.

4Q08 outlook continues to be strong. We expect company
should be able to deliver ~15% sequential revenue growth
(or ~87% YoY) to ~US$155M in 4Q08, vs. consensus of
US$151.6M. We expect strong internet usage growth and
increasing ad budget allocation to online media should
benefit Baidu and other online ad companies.

To set a good opening for internet sector. Baidu is the
first Chinese Internet company to report 3Q08 results.
We believe the good results and guidance should set a
positive tone for other China internet companies.
Besides Baidu, we also like Sina and Sohu at this

Maintain Dec-08 PT of US$380, which implies
90.6x 2008E, 56.2x 2009E, and 36.9x 2010E
diluted GAAP P/E (or 83.5x 2008E, 53.6x 2009E,
and 35.8x 2010E diluted adjusted P/E). We
would advise investors to accumulate
the stock ahead of results.

Near-term share price drivers are: (1) potential upside
from conservative Q3 guidance, (2) margins improvements
in 2009 on better leverage from brand advertising, and
(3) earnings upside from new eCommerce business.

Friday, October 17, 2008

Cooperation with Cisco

Baidu announced on Thursday that it has deepened its strategic
cooperation with Cisco, and the alliance has realized the
research and development, deployment and testing of an imitated
Internet platform scheme.

A research group coestablished by the two parties has completed
the ultimate bearing capacity test of "next generation" Internet
platforms. In addition, it will study such popular technology
programs as netizen experience and IPv6.

According to Baidu, the cooperation combines superior resources
from both parties, including labor, equipment and capital.

The two parties are expected to prepare for the arrival of
"next generation" Internet and search engines by establishing
co- labs, setting up program R&D teams, as well as interacting
on technology issues.

Analysts believe Baidu aims to push forward Internet technology
standardization for the approaching new Internet era, as its
current R&D activities have covered a whole industrial chain,
ranging from core network facilities, connection, end-devices
to testing instruments.

Besides the cooperation with Cisco in the fields of IPv6 and
100G Internet bearing capacity research, Baidu is also working
with such companies as Huawei Technologies and H3C in Ethernet
and mobile Internet technology, and with Intel and Nankai
University, in high-performance computer and solid state disk
technologies respectively.

Friday, October 10, 2008

172 million online vistors weekly

Nielsen Online is teaming up with the operator of
ChinaRank to offer traffic insight into China's
fast-growing Internet market. Now that China has
more than 250 million people online, gauging the
country's Web pulse is critical.

Baidu 171 million

Tencent 117 million

SINA 108 million

Google 81 million

Sohu 74 million

NetEase 58 million

Source: CR-Nielsen.

Chief Scientist may resign

Baidu chief scientist Dr. William I. Chang is planning
to resign in protest of the company's new chief technology
officer, reports citing inside sources.
Robin Li, Baidu's CEO, asked Chang to take over more
technology and human resources duties while taking in
Yinan Li, the new CTO, but Chang refused in order to focus
on his current technology research, said the report. Chang
will be succeeded by Hong Tao, said the report. Chang
joined Baidu in January, 2007 after serving as chief
technology officer at Infoseek.

Thursday, October 9, 2008

Online C2C platform named "youa"

Literally meaning "got it" in Chinese. Baidu has
adopted an independent domain name "".
Li Mingyuan, an official from Baidu's e-commerce
department, said that "youa", easy to remember
for the Chinese, accords with the spelling rules
of the language.

Sunday, October 5, 2008

Yinan Li appointed CTO

"We are pleased to welcome Yinan to our senior
management team," said Robin Li, Baidu's chief
executive officer. "Yinan has a strong track
record of developing and applying technologies
that succeed in the marketplace. As Baidu's
chief technology officer, Yinan will draw on
his expertise to lead our technology teams,
helping us to excel in the development and
adoption of new products and technologies.
Yinan's rich experience, both in start-up
companies and in corporate executive positions,
gives me confidence in his ability to lead
technology innovation and integration at Baidu."

An experienced research and development leader,
Li has more than 16 years of experience in the
information technology industry. Prior to
joining Baidu, Li served as chief
telecommunications scientist and vice president
at Huawei Technologies, a telecom solutions
provider. In that position, he oversaw the
development of 3G mobile chipsets. Li joined
Huawei from Harbour Networks, a developer of
intelligent security systems, where he served
as chief executive officer. His work at Harbour
Networks was preceded by various positions at
Huawei Technologies, including product manager,
director of research and development and president
of research and development where he led a staff
of over 5,000.

Li holds a master's and a bachelor's degree in
optical engineering from Huazhong University of
Science and Technology in Wuhan, China.