"We use a square root sign to describe Baidu's
growth structure. The angled line on the left
part of a square root shape represents
consumptions, while the horizontal line on the
right stands for the advertiser budget limit.
We think Baidu has shifted its major focus to
work on improving the ROI of customers
through Phoenix Nest System, whereby it can
lift the budget line to monetize growing traffics.
We think ARPU can easily double and triple
from current levels in the next couple of years.
That being said, we feel Baidu is facing
increasing competition on the consumption
side, with emerging rivals such as Tencent,
Alibaba.com, and Taobao.com. Combining
these factors, we think it is premature to
worry about Baidu.com's growth at this point,
because the market size is becoming much
bigger from current level"
Their 2010 non-GAAP EPS estimate is $10.