Thursday, February 26, 2009

Tudou joins Baidu Union

Chinese online video sharing site Tudou has
confirmed its entry into the Baidu Union, the
online advertising network of Chinese Internet
search engine Baidu. The two parties plan to
cooperate in the area of video search. Tudou
previously used Google as its video search

In the past Baidu had partnered with Youku for
video search, but in December 2008, Youku,
citing increased bandwidth costs caused by
excessive traffic, blocked access to its site from
Baidu searches.

Wednesday, February 25, 2009

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

Friday, February 20, 2009

Youa cleans up fake brands, the Internet shopping platform launched
by Baidu, has announced the first batch of 15 stores that
have been closed because they were selling counterfeit
branded clothing. This move is a part of Baidu's special
action called Spring Thunder, which will last from
February 17 until March 31, 2009. During this period, will publish the list of the punished
sellers in its online forum each day. This special action
targets sellers who violate the regulations of the platform
and sell fake goods to consumers. Once the website gains
proof about the selling of fake goods, the sellers will be
listed on a credit blacklist and when the number or value
of the sold fake goods accumulates to a certain amount,
these sellers will be eliminated from
permanently. A representative from
told local media that since the platform has been launched,
its trading volume continues to increase and the number
of its registered sellers reached 100,000 when it was just
opened for 20 days. To protect the interests and rights
of consumers, the website plans to seek the opportunity
to fight irregular sellers any chance it gets. The
representative says the goal of this special action is to
maintain a good shopping environment and to promote the
fair, just and open competition among online shop owners.
In the future, the company will impose quick and harsh
punishments to sellers who sell fake goods. At the same
time, it will call for the support of consumers to report
irregular activities.

Morgan Stanley expects Baidu's market share to slip in the next 5 years

Predicts Baidu will see market share in China's paid search
field slip 15 percentage points in the coming five years. On
February 19, 2009, the investment bank made comments
on Baidu's financial report for the fourth quarter of the
2008 fiscal year, saying that the Internet company's sales
value surged 76% to USD 132.2 million as expected. However,
its diluted EPS jumped 31% to CNY 8.31 apiece, and was
lower than expectations, due to dropping OP Margin and
rising tax rates. Excitingly, the effect of being accused of
fake ranking has dissipated. Baidu's paid user base climbed
1.5% in the period to 197,000. But, Baidu still made a cautious
prediction for the first quarter of 2009, saying that its sales
value will jump 36% to 39%. China's Internet users will leap
30% this year, and Baidu will take a market share of more
than 60% in the paid search field, according to Morgan
Stanley's forecast.

Thursday, February 19, 2009

Citigroup bearish

Citigroup analyst Jason Brueschke wrote in a note
to clients that Baidu has gone from being one of the
most defensive media stocks to buy to now "one of
the most exposed to the slowing economy.""Although
Baidu is making all the right moves, we believe
that -- at the current price -- the risk-reward going
forward is not favorable," he wrote. "It is too early
to buy or cover shorts, as we expect the stock will
trade lower in coming quarter(s)."

Pacific Crest bullish on the long-term outlook

Steve Weinstein, an analyst with Pacific Crest Securities,
wrote in a note to clients that he expects Baidu to have
trouble luring new advertisers and convincing existing
customers to spend more in 2009 because of the
economy.However, he said the company has lots of room
to grow beyond that because of strong growth in Internet
searching in China."Although we continue to see
near-term risk related to the economy, we view 2009
as a transition year and believe Baidu is well positioned
to capture a massive opportunity over the next several
years," Weinstein wrote. "We continue to like the shares
long term."

Needham keeps underperform

Needham believes risk to estimates has been fully
priced into the stock after BIDU's weaker than
expected Q4 results and lower profitability outlook.
The firm sees downside to $90 per share and keeps
an Underperform rating on the stock.

Goldman ups price target

Baidu price target raised at Goldman to $153 from
$140 based on solid Q4 results. Slowing revenue
growth did not hurt earnings as badly as feared,
and weak guidance was still better than consensus
expectations. Maintained Buy rating.

Pali maintains sell

Pali Capital maintains a Sell rating on BIDU shares
following the company's Q4 results and below
consensus Q1 guidance. The firm thinks the pick up
in traffic could be attributed to the company's
increased marketing spend rather than to the
improvement in the general economy and feels
fundamentals did not improve.

Wednesday, February 18, 2009

Rule-violating medical/pharma ads still on Baidu

An anti-malware alliance is accusing Baidu
of still having a "large amount" of "rule-violating"
medical/pharmaceutical bid-ranking advertisements
in its search results, reports The alliance
says in a report that the volume of medical/
pharmaceutical bid-ranking advertisements on fell after a media expose but has since
seen a big comeback. Ads for the aforementioned
industry accounted for 36.62%, or 650,000, of
Baidu bid-ranking ads on December 14, as compared
to 27.5%, or 300,000, of total ads on November 27,
said the alliance report.

Baidu agents to get Merc as reward

Baidu recently convened a conference for domestic agents
in Singapore concerning 2009 channel expansion, reports
Sohu. To spur future performance, the search giant
announced that agents with the largest contribution and
growth in 2008 will receive a Mercedes-Benz as a reward.

Tuesday, February 17, 2009

RBC cuts estimates

RBC Capital analyst Stephen Ju this morning chopped
his price target and estimates on Baidu while maintaining
his Outperform rating on the Chinese Internet search
engine. Ju reduced his price target on the shares to
$182, from $242. He cut his 2009 EPS estimate to
$5.69, from $6.16. He now sees revenue for the year of
$596 million, down from $684 million. Consensus is
$613 million. Ju writes that his continued positive view
on the stock reflects his view that, despite the dismal
economic backdrop and limited visibility, the number of
Internet users in China should still grow 26%-27% in
2009. “The implicit assumption here is that BIDU
maintains its query and advertiser wallet share, with no
other growth driver aside from the increase in the
volume of clicks coming from the increase of Internet
users,” he writes.

Monday, February 9, 2009

Baidu's market share at 73.2%; domestic share at 90%

The People's Daily has reported that based on the
number of search queries, Baidu had a 73.2% share
of the Chinese search market in 2008, with 90% of
domestic users choosing to search with the company.
Baidu currently handles several hundred million
search requests each day. The numbers are from
iResearch, which also pointed out Baidu invests
almost 1/3rd of its revenue in R&D.

More than the actual numbers, imposing as they are,
is the fact that it is the People's Daily reporting this.
This paper is an official Government publication (the
Communist Party's publication, in fact) and the report
underscores the government's commitment to get
Baidu to succeed.

Friday, February 6, 2009

Baidu's search volume shrinks in Q4 per Majestic Research

Baidu’s fourth-quarter search volumes appeared to fall
3 percent from the preceding quarter, but rose 10 percent
from the same period a year ago, according to estimates
this month at New York-based Majestic Research Corp.
Majestic uses a proprietary method to collect data on
Baidu search volumes.

Thursday, February 5, 2009

DCCI on seach ad revenues in 08

The Data Center of the Chinese Internet (DCCI) has released
new statistics for 2008 search engine advertising revenues
showing that China's search advertising revenues rose to
RMB 5.08 bln last year. DCCI predicts that search advertising
revenues will grow to RMB 8.49 bln in 2009, up 67% over 2008.
Search engine traffic rose and fell by varying degrees in 2008,
influenced by such major events as the Wenchuan earthquake
and the Olympics, and by increased attention to and investment
in search advertising from both SMEs and branded advertisers.
Keyword ads, content network ads, search-based branding ads,
and other search-related services grew by a combined 86.2%
in 2008.

Wednesday, February 4, 2009

Baidu advertises heavily on CCTV

for the spring festival, New Year, gala.
Baidu was the brand sponsor for a segment.
Its search bar got about 30 minutes of air time
with all the promotions, while company CEO
Robin Li was shown 8 times -- more than any
other Gala audience member was shot this year,
or ever.

Japanese ecommerce platform launched

Baidu has launched a beta version of a new e-commerce
service which is an integration platform to help Japanese
companies sell Japanese-made products to Chinese
mainland customers. According to Baidu, the product
information published on this website at is provided by its Japanese cooperative
partners. At present, its major partner is,
authorized by Navibird owned by the Nissen Group, and
all the products now displayed on the e-commerce
website are linked to the Chinese website of
Baidu has published a notice about the business structure
of this website, which says the website is a platform that
integrates e-commerce products and it is not responsible
for product advisory or order inquiry related to its
cooperative partners. Baidu appears to want to remain
hands-off, which could become a problem if some of the
products are defective or customer service via Baidu's
partners is not optimal. Baidu also points that its
cooperative partners will be responsible for all the issues
related to the products shown on the website, including
the prices, quality, pictures of the products, after-sales
services, delivery methods and delivery areas, and Baidu
will not assume any liability for the information concerning
the products.

Campus recruitment for e-commerce platform

Baidu has begun campus recruitment for its
consumer-to-consumer e-commerce platform
"Baidu Youa," said the company's official site.
Baidu did not announce specific recruitment targets
but said positions would include research and
development engineers and assistants for the Youa
platform and Baidu's online payment system

Baidu Youa employs about 150 of Baidu's
5,000-person staff, reports Sina. The company
announced last September that it planned to recruit
more than 600 employees from domestic college
campuses in 2009.