Thursday, February 25, 2010

Baidu leads the wireless search market: Analysys

The top eight were Baidu, Google,,,
3GYY,,, and Baidu
had 26.6% to Google's 23.6%. Total daily wireless search
pageviews in the fourth quarter was 1.131 billion. Baidu
had 31.1% market share to Google's 19.8%.

Wednesday, February 24, 2010

Details of how Baidu's DNS entry was hacked

Amazingly the low-tech way of lying to a support person
at Told the support person was from Baidu,
and gave an incorrect verification code. Was still granted

Details here:

Baidu's video subsidiary to be called "Qiyi"

Meaning "great art". The domain will go online in
March. The company's logo has also been designed.

Tuesday, February 23, 2010

Music copyright society wins suit against Baidu

On February 23, the Beijing Haidian District People's
Court ruled in favor of the Music Copyright Society
of China in its copyright suit against Baidu's MP3 and
lyrics search service. The court ordered Baidu to cease
offering lyrics, including Baidu Cache snapshots of
webpages containing the lyrics, for the 50 songs named
in the lawsuit, and to pay RMB 50,000 in economic
damages and an additional RMB 10,000 to cover legal fees.
In the same ruling, the court rejected the Music Copyright
Society of China's other suits against Baidu. Baidu said it
would appeal the decision.

Source: Marbridge Daily

Thursday, February 11, 2010

Baidu releases Mobile-software search report

3G functions surpassed music as the most popular
mobile function in 2009, while instant messaging
software accounts for the greatest number of mobile
software searches at 30%, reported.
Tencent's (0700.HK) "QQ" instant messaging tool
accounts for 50% of mobile software searches, while
the second-most searched mobile software,
China Mobile's mobile instant messaging tool "Fetion,"
made up nearly 10% of searches.

Mobile displays, videos and games are the three most
common entertainment-related mobile searches, with
displays and video accounting for about 30% and 20%
of all such searches, according to the report.

[Source: Pacific Epoch]

New online marketing customer tool

Baidu is internally testing software for online marketing
customers, as of now called Baidu Bridge. It includes
instant messaging, visitor tracking, marketing assessment
and customer service management, and will be integrated
with Baidu's statistics service, "Baidu Tongji."

[Source: Pacific Epoch,]

Video spinoff to offer search by dialogue

The company, majority controlled by Baidu, but with
money from Providence Equity and the CEO, Gong Yu,
will offer movie search based on dialogue quotes. They
already have offices in Chongqing and Chengdu.

[Source: Marbridge Consulting]

Wednesday, February 10, 2010

Analyst recommendations: Details


Ming Zhao sees beat-and-raise (beat estimate and
raise guidance) as bullish. Record cash flow generation
in last quarter. Transition to Phoenix Nest better than
expected, especially for large customers. Also,
e-commerce is a significant driver. A secular growth
story in the Chinese Internet space.

Bank of America/Merill Lynch (BofA/ML)

Eddie Leung: Positives - PN (Phoenix Nest), Google
incident, managing costs to benefit from op leverage.

EPS estimates (RMB)
2010 67.87
2011 102.12
2012 147.69

Projected P/E
2010 43.75
2011 29.09
2012 20.11

Pacific Crest

Steve Weinstein said Baidu is well-positioned to
benefit from growth in Internet searches and China's
economic development. He raised his 2010 earnings
and revenue estimates.

Weinstein added that Baidu should continue to do well,
especially if Google leaves the Chinese market. At the
same time he downplayed the impact of Google
on Baidu's guidance for Q1 2010.

Deutsche Bank

"The earnings surprise was largely due to 1) lower than
expected SG&A and 2) other income of RMB28m, which
we believe is related to govt subsidies...Active advertisers
in 4Q09 totaled 223k, up 13% YoY and 3% QoQ. We believe
the sequential growth proves that Baidu new customer
acquisition was smooth in Oct and Nov...we think margins in
1Q10 could improve YoY, given the substantial marketing
campaign launched in 1Q09 to recover brand image."

Credit Lyonnaise SA (CLSA)

Elinor Leung (Hong Kong): "If I was a Google customer,
I would want to start looking for alternatives to plan for
my 2010 advertising budget. I may want to hedge my
bets in case Google really wants to leave the country."

Piper Jaffray

Vivian Leigh: "Last night, Baidu delivered above-expectation
December quarter results and March quarter guidance. The
company guided the midpoint of March revenue to $178M,
above the Street at $170M. Baidu management mentioned
this guidance does not factor in the potential revenue from
Google shutting down, but suggested they expect to
benefit if shuts down."

Morgan Stanley

Richard Ji: "What we liked: 1) Paying customers and
ARPU (average spending per customer) rose
13% and 24% YoY each. Notably, Baidu's total paying
customers account for less than 1% of total SMEs in
China. 2) Sales from Baidu Union outpaced its organic
paid listing sales (+50-60% YoY, vs 20-30%, on our
estimates). 3) Baidu has attracted more large corporate
customers for paid listings, who often spend significantly
more than SMEs. 4) Baidu offered strong
1Q2010 guidance, with sales likely up 48-52% YoY...

What concerned us: 1) Japanese venture trimmed Baidu's
earnings by 10%. 2) ARPU dipped 3.4% QoQ, affected by
the customer transition to Phoenix Nest.

Estimates (EPS, diluted)
2010: $8.97 (up 9%)
2011: $12.53 (up 11%)
2012: $15.32

2010 : $893 mln (up 7%)
2011: 1.287 bln (up 8%)

Bear case PT: $330.1
Bull case PT: $589.2
Base case PT: $459.1

Goldman Sachs (GS)

James Mitchell: "Solid guidance for a seasonally weak
quarter suggests advertisers are responding positively
to the new bidding system, and consensus for 2010 and
2011 appears materially too low. Expenses exceeded
estimate but do not unduly concern, given several
non-recurring items in 4Q2009 (office relocation,
10th anniversary celebration, Baidu Professional

2010 EPS: raised to $10.71 from $10.59
2011 EPS: raised to $16.72 from $16.16

Kaufman Bros

Aaron Kessler: "BIDU reported 3% upside to
4Q revenue operating income...Gross revenue of
$185M (40% Y/Y) vs. Street at $180M, due to
better-than-anticipated adoption of Phoenix Nest...
1Q10 revenue guidance of $176M-$181M (down
2%-5% Q/Q) vs. Street at $169M, due to better
4Q and PN transition...Increase 2010 Revenues
and PF EPS by 4%." That is $920 million gross
revenue (earlier estimate of $888 million) and
pro forma EPS of $9.55 (earlier $9.15) for 2010.
For 2011, he raised his projections to $1.275 billion
and $13.47 from $1.162 billion and $13.02,

Standard and Poor (S&P)

BIDU posts Q4 earnings per ADS of $1.80 vs.
$1.22, $0.13 better than our forecast. Revenues rose
40%, above our 34% estimate, reflecting successes
related to a key technology transition. With this largely
completed, related expenses should normalize. BIDU is
also pursuing a variety of promising growth opportunities,
in our view. We are raising our '10 per-ADS profit estimate
to $9.19 from $7.84, and setting an '11 forecast of $12.05.
Based on revised peer analysis, and accounting for a favorable
competitive backdrop, we are raising our 12-month target
price to $560 from $500.

Analyst recommendations: rating summary

Susquehanna: Reiterates buy
JP Morgan: Maintains Overweight
BofA/ML: Maintains Buy
Pacific Crest: Maintains Buy
Deutsche Bank: Maintains Buy
RBC: Maintains Outperform
Citigroup: Maintains Buy
Piper Jaffray: Maintains Neutral
UBS: Maintains Buy
Morgan Stanley: Maintains Equal-Weight
Goldman Sachs: Maintains Buy
Kaufman Bros: Maintains Hold
S&P: Upgrades from Hold to Buy
HSBC: Upgrades to Neutral from Underweight
Credit Suisse: Maintains Neutral

PS: That is the strongest set of recommendations since the stock
started trading.

Analyst recommendations: price target summary

Susquehanna: $540
JP Morgan: $540
BofA/ML: $545
Pacific Crest: $600
Deutsche Bank: $604
RBC: $594
Citigroup: $550
Piper Jaffray: $454
UBS: $523
Morgan Stanley: $459.10
Goldman Sachs: $575
Kaufman Bros: $540
HSBC: $442
S&P: $560
Credit Suisse: $423

Monday, February 8, 2010

Floating ad space on Baidu Union websites

The new format allows Baidu Union members to place floating
window ads, allowing advertisers to control placement including
sidebars or click-to-open windows, left or right panes, and user
options to close the window.

Sunday, February 7, 2010

Beta 2.0 version of Pocket Baidu launched

The interface has been redesigned on the visual front. There is
a new bookmarks feature and multi-browsing support, with
upto 6 simultaneously open windows. Support for new versions
of some mobile phones from Samsung and Nokia added as well.

Friday, February 5, 2010

RBC reiterates "Market Outperform", raises price target to $554

Stephen Ju assumes the chance Google leaves China is 75%.
He believes the Chinese government has little reason to allow
uncensored search, and so Google will have to leave. Also
believes Taobao might launch a general search platform, which,
considering their ecommerce traffic, could mop up ad money.

Thursday, February 4, 2010

Postbar has 20 million users

by now. Daily page views of 250 million. Registered
users 18 million for iPostbar, the personal information center.
Regular postbar is more of an online forum. IPostbar will now
feature timely topics such as the movie Avatar and the Chinese
New Year CCTV Spring Festival Gala, as per postbar GM
Shu Xun.

Last month, Postbar had 12 million users, which means a
month-to-month growth of 8 million (6.7%).

Tuesday, February 2, 2010

Goldman Sachs reiterates buy

Raises price target from $500 to $550. Believes is 70%
likely to go. EPS estimate for 2010 is $10.59 and for 2011,
16.16. That is a 3% and 5% raise, respectively. Believes even if
Google stays, the Chinese government will act to limit its
potential market share gains. Says Google has already seen a 30%
drop in China revenue.

Monday, February 1, 2010

Credit Suisse raises from "Underperform" to "Neutral"

Wallace Cheung expects Google to keep its salesforce
and R&D in China. But he still thinks Google China would
lose about a third of its business to Baidu as an after-effect.
New price target of $400. Believes Baidu's current market
share drop, from the Phoenix Nest transition, will bottom
out at 47%.

International headquarters planned in Shenzhen

In booming Guangdong province (Canton, next to Hong Kong).
The company will provide details when the financial
arrangements are worked out with the city.

Susquehanna raises PT to $520

The firm has long maintained a buy on Baidu. The analyst,
Ming Zhao, with the best track record on Baidu's stock,
believes the probability of Google leaving China is
increasing, not decreasing.

"Based on our most recent checks," Zhao writes, "we think
the transition to the Phoenix Nest system has been better
than expected." Zhao ups his 2010 EPS forecast to
$9.19, from $8.72.

[Source: MarketWatch, Barrons online]