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."
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