Monday, March 30, 2009

S&P reiterates sell

The Wall Street Journal reports that Google is
offering a music service which allows free
streaming and downloading of songs from more
than 140 labels, including the four largest -
Warner Music Group, Universal Music, EMI and
Sony. The story notes that Google and its partners
“hope the service will draw users away from
Google’s Chinese competitors, especially Baidu,”
which dominates the Chinese search market.
The service will give record companies about
half of any revenue from banner ads on the site
when they are downloading and streaming songs.
The rest will go to a Chinese site partially owned
by Google called; Google gets more
traffic and can sell search ads on the site.
Standard & Poor’s analyst Scott Kessler said the
music service “will help round out GOOG’s offerings
in the Chinese market, and aid the company’s
market share in the country.” He repeats his Sell
rating on Baidu shares.

IFPI ready to settle

Liang Meisi, the Asia president of the International
Federation of the Phonographic Industry (IFPI), stated
Monday that, despite continuing legal proceedings, the
IFPI is willing to seek reconciliation with Baidu, reports Liang said the IFPI is willing to cooperate with
all search engines under the appropriate commercial
mode. IFPI members Universal Music Ltd, Sony BMG
Music Entertainment (Hong Kong) Ltd and Warner
Music Hong Kong Ltd sued Baidu for providing deep links
to music content in February 2008.

Three midlevel executives dismissed in Guangzhou

Chief Operating Officer Ye Peng announced the
dismissal of three mid-level managers in charge of
sales and operation during his visit to the company's
Guangzhou subsidiary on March 27, reports
Peng did not announce a reason for the dismissals,
which were effective immediately and included
subsidiary Director Xie Fangmin, said the report.

Xie served as Baidu sales manager, senior manager
and sales director after leaving a position as sales chief
for online travel services provider eLong, said the
report. Except for a few executives, most Baidu employees
had not heard of Ye's Guangzhou visit, the report said.

Friday, March 27, 2009

Users riled by Baidu forum update

Baidu recently updated its online forum
"Baidu Post Bar" to display the number of views
and add skin color functions to each post, reports
Sohu. Users complaints about slower access speed
and limited color choices caused Baidu to revert to
the old version on Friday afternoon, said the report.

Thursday, March 26, 2009

New customized homepage for users

Baidu is internally testing a new version of its
customized homepage at,
reports Sina quoting unnamed sources. Baidu's
public relations department refused to comment,
but an unnamed insider confirmed that the
IP address belongs to Baidu and the version is
under testing, said the report. Baidu released its
customizable homepage at in
April 2008, and the service added calendar and
video search tools in September 2008.

Tuesday, March 24, 2009

Deutsche Bank starts coverage with Buy, PT:$211

Deutsche Bank analyst Alan Hellawell launched
coverage of Baidu this morning with a Buy rating
and a $211 price target. Moreover, he says a
“blue-sky scenario” yields a valuation of $432.
Hellawell notes that the Chinese search market is
a duopoly, with 62% market share for Baidu, and
28% for Google; he also notes that the market is
“still nascent,” and should grow 37% compounded
through 2012. “Baidu is poised not only to continue
dominating online search but will have significant
leverage to expand its footprint across the Internet
economy” via network effects, brand equity,
technology and monetization advantages and its
sales distribution network.”

Friday, March 20, 2009

ISC integrity alliance

The Internet Society of China (ISC) teamed up with
Baidu , Sina (Nasdaq:SINA), Sohu (Nasdaq:SOHU),
NetEase (Nasdaq:NTES), Tencent (700.HK) and
Phoenix Satellite Television Holdings' (2008.HK)
portal, to form a "China Internet Integrity
Promotion League" on March 10, said the official
ISC site. Nearly 100 Internet companies applied
to join the alliance, which encourages a trustworthy
and civilized online environment.

ISC also announced its second batch of credit
rankings on the same day. Kingdee (268.HK) and joined Baidu, Tencent, Sina, Sohu,
NetEase and others at the AAA level.

Expanding in Japan

Baidu is preparing to add staff in Japan to help offer
better localized services to Japanese users. Specifically
the company plans to double the number of project
managers from 40 to 80 by the end of 2009.
Some of the services which Baidu Japan plans to offer
include: an online Q&A service, a bulletin board
system for uploading and posting video clips,
and a Japanese mobile phone search service.

Hong Kong domain reregistered

Baidu has obtained domain name,
originally registered by Zongheng International
Holding Company, through arbitration in Hong Kong,
reports DoNews quoting unnamed sources. The
domain now links directly to the Baidu homepage.
The search giant currently owns 16 domains including and, said the report.

Friday, March 13, 2009

Marketing restructured

Baidu disclosed plans to divide its search product
marketing business into two departments in an
internal email sent on Thursday, reports Sina.
Web Search Technology Officer Wang Mengqiu
will head a new department for webpage search
product marketing, while vertical and community
search product marketing will led by Vice President
Yu Jun, said the email.

Search Product Marketing Director Bian Jiang has
resigned for personal reasons, effective at the end
of March, the email said. Bian joined Baidu in 2003
and has led most of the company's product
development, said the report.

Downgrade by S&P

From Buy to Hold, on valuation.

"We continue to view BIDU as the clear leader in
the Chinese search segment. Despite economic
weakness, we project strong revenue growth for
the company in '09. Based on the benefits of being
a Chinese company, capturing early market
leadership, and having a well-known brand, we
believe that BIDU will likely at least maintain its
marketshare over the near to intermediate term.
However, the ADSs have appreciated strongly
month to date, and we see only modest upside to
our 12-month target price, which we keep at $180."

Wednesday, March 11, 2009

Price target raised at Goldman

to $185, from $153, based on improved confidence in
growth potential. Note that changes to first page of
results will be phased in gradually, limiting the
potential for a major revenue loss. Maintained Buy

Downgrade by Nomura

BIDU Baidu downgraded to neutral from buy at
Nomura Securities (03/11).
Target remains $175. Firm notes a limited upside.
Estimates are maintained.

Thursday, March 5, 2009

Youku unblocks Baidu

Baidu's video search indexes Youku now.

Phoenix next on schedule for Q2 09

Baidu's ad auction system "Phoenix Nest" is in
its final stage of testing and on schedule for
release in the second quarter of 2009, reports
National Business Daily quoting Baidu Sales
Vice President Shi Youcai on March 3. Shi said
Phoenix Nest is a system update, not the second
commercial product after bid-ranking. During its
fourth quarter 2008 conference call, Baidu said
the system, with improved relevance and additional
customer tools, would be "broadly available" in the
second quarter. Currently being tested on the
right-hand side of Baidu search results, Baidu
management said Phoenix Nest would potentially be
offered for left-hand and top-left spaces.

Since "the issue" last November, Baidu has
strengthened management of its local agents and
emphasized honesty and corporate culture as the
foundation of business performance, said Shi.

CNNIC stats on the search marketing side

China had more than 200 million search engine
users by the end of 2008, making search the fourth
most common use of the Internet, reports
quoting China Internet Network Information Center
statistics. Among enterprises that use search
marketing, 86% and 60.2% chose Baidu and
Google, respectively. Baidu was the top choice for
72.2% of enterprises that use only one search engine
and 93.1% of enterprises that use multiple engines.

Among all enterprises interviewed, 14.1% plan to
increase their spending on paid search, 55.3% will
maintain spending and 7.8% plan to discontinue the
service. Roughly 76% said they spend more than
RMB 5,000 annually on search results. Among
search advertisers, 78% book annual revenue of
RMB 1-50 million, with 61.1% recording between
RMB 1-20 million. The manufacturing, IT and trade
industries account for 49.3%, 12.5% and 10.3% of
search advertisers, respectively.

Among search engine users, 44% are female, an
increase of 1% year-on-year; 70.1% are under 30,
among who 31.7% are students, with 30.3%, 28.8%
and 25.1% receiving high school, college and university
degrees. Among all users, 33.3% earn more than
RMB 2,000 per month, 40.8% earn less than
RMB 1,000 monthly, and 32.6% search for music.

Baidu Youa gains a foothold

The number of items listed on Baidu's new
consumer-to-consumer (C2C) platform
Baidu Youa accounted for 3.8 percent of all
C2C item listings in China in the fourth quarter
of 2008, according to a research report released
on March 5.

Citi's Brueschke upgrades Baidu

to outperform, with $180 price target. Says traffic
has improved more than expected after the New Year
holidays, and Baidu likely will beat expectations for Q1.
Still sees medium-term risk in Taobao luring away ad
dollars, and the move to having ads on the right side of
the page reducing clickthru rates.

Baidu's search user share is at 76.9% in 08

Baidu's search user share is at 76.9%, according to a
research report from China Internet Network
Information Center (CNNIC). Google is at
16.6% and Sohu at 2.9 percent. The loyalty of
first priority for Baidu's search engine has hit
96% and other search engines have
suffered decline of loyalty, in comparison with that in
2007. The number of Chinese users of search engine
has hit 203 million by the end of 2008, up 33.6%
over 2007, according to the report.