Munster: Internet crackdown in China

China today is reportedly shutting down about
10,000 unregistered and unapproved Web sites,
most of them operated by small businesses,
according to Piper Jaffray analyst Gene Munster.
He says that “multiple Chinese media sources”
last night discussed the push to clean up unwanted
Internet sites. Munster says the move could have
a small negative impact on Baidu. He notes that at
the end of 2008, the company had
197,000 customers. He figures that about half of the
Web sites that the government is shutting down were
likely buying key words from Baidu, or about 2.5% of
its customers. But since most are small, he says the
revenue hit is likely to be smaller, in the 1%-2%
range, and should only last a quarter, while the
sites register, gain government approval and
re-open. Munster trimmed his 2009 revenue forecast
to $560.8 million, from $568 million, to reflect the
crackdown; he maintains his Buy rating and $180 price
target.