Wednesday, January 28, 2009

Sanford Bernstein starts coverage with Outperform

“China is now the world’s largest and fastest growing online
market,” Bernstein analyst Jeffrey Lindsay wrote in a note to
clients. “There is more than enough domestic growth to fuel
both players for at least the next five years.” Online
advertising in China will grow 28 percent in 2009, compared
with 11 percent in the U.S., the New York-based analyst
wrote. Chinese wireless data usage will grow 63 percent this
year, Bernstein said. Both Internet companies will have revenue
growth of more than 20 percent through 2014, he said. The
analyst started coverage with an estimated stock price of $170
for Baidu. “Concerns about the Chinese economy and spate of
controversies affecting the Internet in China, including a recent
crackdown on pornography, have rattled investor confidence”
Lindsay wrote. “These fears, in our view, are unwarranted.”

Friday, January 23, 2009

Analysys estimate for Q4 08

Total online ad search revenue for Q4 08 estimated
at 1.52577 billion rmb, a growth rate of 62.2%.

Search share
BIDU: 62.2% (was 59.3% in 2007)
Google: 27.8% (was 23.4% in 2007)
Yahoo: 5.8% (was 11% in 2007)
Sogou: 0.9%
Zhongsou: 0.9%
Sina: 0.4%
Ntes: 0.4%
Soso: 0.6%
Others: 1.0%

Total estimated revenue for Baidu is
139.6 million yuan, a 77% yoy increase.

Thursday, January 22, 2009

JP Morgan cuts estimates

J.P. Morgan on Friday cut its 2009 earnings forecast
and price targets for Baidu, citing slowing economic
growth and advertising revenue. J.P. Morgan had
earlier lowered its forecast for China's economic
growth this year to 7.2 percent and said the country's
advertising market growth would be flat in 2009, after
an earlier projection of 5 percent growth. The lowered
outlook comes a day after China said its economy grew
9.0 percent last year, the slowest pace in seven years.

The U.S. bank revised down its December 2009 share
price target for Baidu to $190, from $300. Baidu's
2008 fourth quarter diluted earnings per share (EPS)
forecast was cut 6.3 percent to $1.19, and the diluted EPS
forecast for the first quarter of this year by 19.1 percent
to $0.93, said the bank. Morgan expects's
revenue to fall 11.7 percent in the first quarter of 2009
from the previous quarter to $116.5 million due to the
slowing economy, but it maintained a positive view of
the company down the road. Baidu continues to improve
its technology and expand its potential to raise revenues,
and the firm leads the country's fast growing search
market, the bank said in a report.

Wednesday, January 21, 2009

Baidu adds suggested keywords

Baidu now has search suggestions for a couple of search
products, including web search, image search, and
video search and maybe more. It has suggestions for both
English and Chinese. The suggested search keywords are
different in different search products.

Baike traffic doubles in 2008

Baidu's wiki encyclopedia channel Baidu Encyclopedia
( gained 360,000 new entries in 2008
to reach 1.42 million in total, while traffic on the channel
grew 102% year-on-year, reports Hexun citing official
data. The channel's entries have been edited a total of
1.54 million times to date, said the report.

Baidu Encyclopedia recorded 1.28 million articles by
September 2008. Wikipedia has 12 million articles,
2.7 million in English, according to its Wikipedia entry.

Sunday, January 18, 2009

Zhidao traffic doubles in 2008

According to figures released by Baidu's Chinese-language
question and answer platform, a total of more than 100 mln
answers were posted to more than 20 mln questions asked
through the service during 2008, up 90% over 2007. The
channel now hosts more than 46 mln questions, and accounts
for 8.4% of Baidu's total traffic.

Thursday, January 15, 2009

Baidu Japan provies voice search service

Baidu's localized search service subsidiary Baidu Japan
has partnered with Japanese PHS operator Willcom Inc.
to release a handset-based Chinese-language voice
search service for Chinese visitors to Japan, reports
China Securities Journal quoting Baidu confirmation.
Baidu Japan has formed partnerships to develop a
shortcut plug-in for Willcom handsets, said the report.
The companies teamed up in September 2008 to provide
handset leasing, a Chinese-language call center and other
information services for Chinese visitors to Japan.

Tuesday, January 13, 2009

Youa rating system updated

Baidu's C2C e-commerce platform "YouA" has
upgraded its trust rating system, with buyers now
able to rate sellers according to their level of
satisfaction on a scale of 100 points. A seller's
overall customer satisfaction rating will be
compiled according to the average rating given
by buyers in the last 6 months. Previously, Baidu
had implemented changes to YouA's trust ratings,
separating evaluation statistics for virtual and
tangible products.

Chinese government taking friendlier approach - Piper

Piper Jaffray notes that in late Nov a story by govt-run
CCTV exposed some unlicensed medical and pharmaceutical
listings on Baidu, which triggered fears that there is a
threat for more similar actions by the govt. However, this
Monday, during a panel hosted by the China Consumer
Society, China govt officials had supportive comments
related to China search engines, suggesting the govt is
adopting a more favorable position toward the company.
Given the govt's position and Baidu's recent actions on
the earlier CCTV accusation, firm believes the likelihood
of additional regulation crack-downs which would
significantly impact BIDU's business has lessened.

Saturday, January 10, 2009

Japanese mail order firm partnering with Baidu

Nissen Holdings Co., a major mail-order firm, will
soon begin working with Baidu Inc., China's leading
Internet search engine, to deliver online marketing
in that country, The Nikkei reported in its Sunday

By next month, Nissen's 10,000 clothing items will
be advertised on the Baidu Web site, allowing Internet
users to click and order. Many Japanese retailers
have tried to market products online to Chinese
consumers, but few have succeeded, due to lack of
brand recognition in China. Nissen hopes to overcome
this issue by working with Baidu to develop a Chinese
customer base for itself. Baidu controls as much as 70%
of China's search-engine market, and is the world's
third-largest player behind the U.S.'s Google Inc. and
Yahoo Inc.

In turn, Baidu expects the partnership to bolster the
appeal of its Web site and hopes that Nissen's know-how
will help it develop an effective overall online-marketing

Nissen will pay Baidu commissions according to the
number of visitors to the Baidu Web site. The Japanese
firm hopes the relationship will generate 500 million yen
in sales the first year, and Y3 billion the third year.

Pali reiterated sell

on Jan 7th.

Pali Research is out with a research note this morning
reiterating its Sell rating and $90 price target on Baidu.
The firm cites efforts by the Chinese government to
better regulate the Internet which have intensified
significantly beginning in 2009. Specifically, Pali notes
news on January 5th that 7 "government agencies issued
a unified effort against unhealthy Internet content." These
agencies have said they are focused on reducing
"pornographic and vulgar contents that are considered
unhealthy to society and youths."

While the firm believes the Chinese internet and search
markets could continue to see healthy growth over the
next few years, Pali said its "short-to-mid term outlook
for Baidu is not bullish." Even though Baidu is currently
trading at its lowest P/E since going public, the firm feels
that "the mass media and regulatory risks are too real to

Pali has a simple, yet effective, analysis as evidence to its
thesis; assuming no negative catalysts emerge at Baidu
over the next 12 months, and applying the low P/E of
19x the firm's FY09 EPS estimate of $6.09, Pali comes
to a stock price of $116. On the other hand, assuming that
the Chinese "government puts in place new laws that force
Baidu to change its current business model...", Pali sees
sales possibly falling by 30% "easily". Using the same
multiple to this new level of earnings, Pali arrives at a
price target of $81. Finally, in the last step of the analysis,
Pali applies a 25% probability to the first scenario, a
75% chance to the latter scenario, and arrives at a
weighted-average price target of $90.

Thursday, January 8, 2009

China's Internet cleanup

MSN was cited for the large amount of inappropriate
images on its film channel and some "selected pictures"
in its social messaging section, along with 13 other local
sites. Microsoft could not immediately be reached for

Late on Thursday Beijing issued a progress update on
the 19 sites originally targeted. Only three were deemed
to have done a "relatively good" job cleaning up, and
among those who "need to continue the clean up" is
Google. The firm had taken initial steps but still had
some vulgar pictures on its "photo search" page, the
China Internet Illegal Information Reporting Centre
said in a report posted on its website
( A Google public relations officer
in Beijing had no comment on the report, but said the
firm abided by Chinese regulations. Baidu fared even
worse and was listed in a group of companies which had
made "ineffective" clean up efforts. "Baidu...has done
some cleaning up, but still has a large amount of vulgar
content," the report said. The company declined
immediate comment.

Local court takes monopoly case

Baidu was sued on Dec. 25, 2008 by for
monopoly, the China Daily reported.,
China's first online information platform linking
medicine manufacturers with distributors and users,
said Baidu blocked its web pages from appearing on
the engine's search results. required
Baidu to stop blocking its web pages and pay
RMB 1.106 million as compensation, the report said. said on its website that Beijing First
Intermediate People's Court accepted the case on
Dec. 26. According to Li Changqing, the representative
lawyer for, the company was forced to sue
Baidu due to out-of-court settlement failing.

Tuesday, January 6, 2009

Pornography warning

On 1/5/2009, 7 separate department agencies announced
that 19 Chinese internet companies have pornography on
their web sites. The list, in order:

1. Google. Web search and photo search. The company didn't
remove pornographic contents even after being notified.

2. Baidu. Baidu Bar, Baidu Space and web search. The company
didn't remove pornographic contents even after been notified.

3. Sina. Sina Album and Sina Blog. The company didn't remove
the pornographic contents in a timely fashion after been notified.

4. Sohu. Sohu Album, Sohu Blog, and Sohu Forum. The company
didn't remove the pornographic contents in a timely fashion after
been notified.

5. Tencent. Photo search, QQ Album and QQ Space. The
company didn't remove the pornographic contents in a timely
fashion after been notified.

6. Ntes. Ntes Album. The company didn't remove the pornographic
contents in a timely fashion after been notified.

7 to 19. 13 other very famous Chinese web sites. Most of the
13 internet companies didn't remove pornographic contents
even after being notified.