"We believe the transition will result in short-term
pain but long-term gain in terms of monetization as
(Phoenix Nest) increases the matching of more
relevant paid links resulting in higher click-through
rates," wrote Paul Keung, an analyst with
Oppenheimer & Co., in a note to investors. He kept
a "Perform" rating on Baidu.
Susquehanna analyst C. Ming Zhao said while the
company's decision to force its customers to migrate to
the new ad system will sacrifice its growth in the next
couple of quarters, the payoff will be "healthier and
more sustainable growth in the future."
The analyst expects Baidu to resume its "solid growth
trend" in the second quarter of 2010.