Friday, February 02, 2007

Baidu and Google

Baidu reacted to the Google selloff yesterday.

As you will note we gave Baidu a target price of $137 for the first half of 2007.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

See this post:

"Price target for January 1, 2007 thru June 30, 2007 = $137
Price target for June 30, 2007 thru December 30, 2007 = $213"

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

On January 11, 2007 it hit $134 per share. Effectively hitting our first half of '07 target within the first 11 days of 2007.

We see the recent weakness as completely expected. We would not be surprised to see a drift down to $108 to $110. We are not predicting that but find the probabilities as favorable.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, January 24, 2007

Baidu's market dominance and the adoption curve


It has long been assumed that the Chinese internet market holds such long term promise that it is imperative for international internet goliaths to gain an early pole position. Well that long term promise seems to be just around the corner with Google, eBay and Yahoo seemingly sitting way back in the pack. Home grown speedsters seem to have secured the early lead and you know what they say about the first mover advantage.

The big news is that the internet population is now squarely above 10% of the entire population. The early adoption phase has ended. The rapid acceleration of the adoption curve has just begun.

As stated within this recent China Daily article the Chinese internet population may overtake the United States within 2 years. It is now estimated that 137 Million people are on the internet within China.

"The growth is now gaining much momentum. We are expecting even faster growth in 2007 and 2008 given that Internet penetration now has exceeded 10.5 percent in the country," said Wang.

"An increasing number of people are now getting hooked to the Web as PCs and Internet access are becoming affordable and Internet-based offerings diversified," Wang said.

With user penetration hitting 10 percent, the Internet would create a vast array of opportunities for businesses.

"As Internet users approach 10 percent of China's population, the Internet is becoming a 'mainstream' medium," said Morgan Stanley.

"In our view, most emerging sectors in China are 'sweet spots' when user penetration ranges between 10 percent and 50 percent."

Morgan Stanley anticipates escalated industry consolidation in China's Internet sector this year, with "market share shifting to a few market leaders" such as NASDAQ-listed Sina Corp, Sohu.com, Baidu, Hong Kong-listed Tencent and unlisted Alibaba.

We have long held that the greatest opportunity for growth lies dead ahead. The next 3 to 6 years should see the fastest Chinese internet adoption rates as a mainstream tool.

In our opinion this should present exceptional opportunities.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Thursday, January 11, 2007

Baidu early Yahoo comparison - continued




Stunningly similar patterns. The similarities of these two companies seem to grow stronger and stronger. The most appropriate shared trait is the growing dominance each shared in their repective home markets as the internet adoption rate began to exceed 10% of the population.

This happened in late 1996 in the USA. It just happened in 2006 in China.

If Baidu returns HALF the results that Yahoo provided in 1997-2000 then Baidu stock has a twenty fold return ahead. Are we saying that is probable? Absolutely not!

Is it possible? Anything is possible.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, January 03, 2007

China hits 132 Million internet users / Analyst upgrades

China has hit 132 Million net users. Up 30% over 2005. This CNET article states that at the current growth rate China may outnumber the 210 Million United States net users by sometime in 2008.

CIBC Worl Markets analyst Paul Keung upgrades Baidu based upon "faster-than-expected market growth".

As stated many times here the Chinese internet market has just entered the hyper growth phase. Just this year China's internet population surpassed 10% penetration. We may see 25% to 35% compounded annual growth for 3 to 5 years.

That would put the total Chinese internet population at approximately 500 Million by the end of 2011.

Add to that the fact that broadband technologies, including high speed wireless connections, are accelerating at break neck speeds across the globe and one can see the phenomenal opportunities the Chinese internet market will present over the coming decade.

Will Baidu be a long term beneficiary?

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Baidu in 2007

What the investor knows...

Baidu will make a bold move into the Japanese search market.

Baidu expects its recently initiated revamped search algorithm to provide significant returns by the second or third quarter of 2007.

Baidu has a critical mass of advertisers numbering well over 100,000 entering 2007. No other search offering in China comes close.

Baidu has a solid 65% market share. Far and away leaders over Google and Yahoo.

What the investor does not know...

Will Baidu make a significant acquisition in video sharing or other social networking sites in 2007?

Will Baidu have a funding event in 2007?

Will the recently announced deal with Microsoft deepen their ability to attract advertisers?

Will Baidu grow top line revenues beyond the current 2007 Wall Street expectations of $199 Million?

Will Baidu grow earnings beyond the current 2007 Wall Street expectations of $1.76 per share?

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Monday, December 18, 2006

W.R. Hambrecht comments on Baidu - again

From James Lee:

Web 2.0 next for Baidu? The Chinese press reported that Baidu could be buying file-sharing website Xunlei (translated Web Thunder in English). We heard from our checks that Google was interested as well. While it is difficult to predict, we believe that either Baidu or Google will make a strategic investment in the user-generated site, which is very popular for file search and fast-download technology (very useful for video content). We believe Baidu plays into the sweet spot of web 2.0, as the company has 60% of its users at age 23 or younger. Among the students, Baidu is the favorite search site by far at 48%. Baidu has created a powerful music search platform, and we believe that other content search such as video is a natural extension.

Great points about Web 2.0 and the youthful audience of Baidu. Much has been made about the youth audience as a weakness for Baidu. It seems that this could actually be their stealth STRENGTH going forward.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Thursday, December 14, 2006

Microsoft alliance officially announced


Baidu has aligned itself with this group of look-a-likes to the cast from "WKRP in Cincinnati".

Will this deal be a long term winner?

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, December 13, 2006

Baidu in talks for video sharing site

Forbes reports that Baidu is in talks with tudou.com and 56.com, two leading Chinese video sharing sites.

Thoughts:

Does the Microsoft Deal rumored earlier in the month have anything to do with these deals? Is Microsoft concurrently investing in Baidu thus enabling a cash portion of a deal?

Could Baidu be buying both video sharing sites?

All designed to keep Google at bay in what will be the largest internet market in terms of users by 2011?

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Friday, December 08, 2006

Google loses key china executive - good news for Baidu?

Seeking Alpha comments on the loss of a key excecutive at Google China.

Hambrecht analyst:

"· Very positive for Baidu. We believe Mr. Chou’s leaving is a major blow to Google China’s localization effort, which is the key to catching up with Baidu.

· Management conflict unsustainable. We view Google China’s management conflict as unsustainable over the longer-term, as Mr. Chou’s frustration has been widely reported by the Chinese press, which led to his departure. We believe his departure is a major setback for Google China as existing localized initiatives face uncertainty.

· Foreign competitors facing issues. We believe that Baidu will likely maintain if not extend its market leading position due to issues faced by its main competitors Google and Yahoo. We listed management conflict as a major concern for Baidu’s peers, which was confirmed by the recent departure of Yahoo China President after being on the job for just 40 days. In addition, MSN China’s two top managers also resigned recently, leaving the company in strategic uncertainty.

· Reiterate Buy with $130 price target. We believe the news is positive for Baidu and recommend aggressive investors buy BIDU on the news."

That is the definition of a bullish commentary.

We feel that the general view within the analyst community, financial press and blogosphere pegs Baidu shares as overvalued. The relatively recent internet crash of 2000 is a constant reminder of the risks. Many are just plain bearish due to this fact.

The Chinese internet market is at levels reminiscent of the mid 1990's within the United States. The growth is ahead. Miles ahead. The roadmap of internet development as developed within the United States and Europe is being read very closely by Robin Li and his management team.

The overall general bearishness regarding Baidu can only be viewed as a bullish indicator.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Tuesday, December 05, 2006

Baidu inks deal with Microsoft, others


Piper Jaffray reports a search distribution deal is in the works with Microsoft's MSN users in China, and Chinese service providers China Telecom Corp. and China Netcom Group Corp.

From the report by Safa Rashtchy:

Rashtchy estimates that any such deal would add up to 50 million more searches daily on Baidu's system, and between $10 million and $20 million in advertising sales next year.

The supposedly pending deal highlights how Western firms are looking to partner with Baidu, which has been able to not just hold onto its market share in China, but add to it despite competition from powerhouses such as Yahoo Inc. and Google.

By locking down major distribution partners, the Chinese company "limits the opportunities for competitors such as Google to gain ground on Baidu's dominant search-query volume share," Rashtchy noted.

We would like to emphasize the likelihood of a more significant deal may be imminent with regard to a Microsoft equity stake in Baidu. We find it highly likely that Microsoft has aligned itself with Baidu in order to gain a significant foothold within the Asain paid search market. It is probable that Microsoft will be taking an equity position in Baidu to cement the relationship. NOTE Google's sale of its 2.6% Baidu this past May. Baidu's recent announcement of a move into Japan may be another way for Microsoft to gain on rivals Yahoo and Google within that very lucrative paid search market.

See our earlier posts citing such possibilities:

September 29th:

"Pure speculation would be that there may be another tech player out there that may be ready to partner / invest in Baidu to gain a significant foothold in China."

October 19th:

"Maybe Baidu is ready to take on a secondary financing event similar to the one Google's had last fall. Could there be an institution or two ready to take a large position through a secondary financing event? Or is there a large technology company or consortium of companies ready to invest / partner with Baidu? Google seems to be losing to Baidu. How will this play with major technology players and media companies in terms of partnerships / sponsorships / deals going forward for Baidu?"

November 8th:

"We expect further deal making may be in the works as it has become apparent that Baidu is a force in the aggregation of all things Chinese."

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Revised estimates for Baidu 2007, 2008, 2009

Revisions based upon recent move into Japan.

Total paid search market in Japan estimated at the following:

2007: $720 Million
2008: $965 Million
2009: $1.3 Billion

Projected Baidu market share:

2007: 1%
2008: 4%
2009: 9%

Revised estimates:

2007 no change.

2008 Revenue $402 Million
2008 EPS $4.18 per share

2009 Revenue $690 Million
2009 EPS $6.83 per share

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Baidu opportunity - Japan is the 2nd largest economy in the world

Lets not forget the fact that Japan is the second largest economy in the world.

From japan-guide.com:

The Japanese economy is one of the strongest in the world. Only the USA has a higher GNP. The Japanese currency is the Yen.

Exports: Japan's main export goods are cars, electronic devices and computers. Most important single trade partner is the USA which imports more than one quarter of all Japanese exports.
Other major export countries are Taiwan, Hong Kong, South Korea, China and Singapore.

Imports: Japan has a large surplus in its export/import balance. The most important import goods are raw materials such as oil, foodstuffs, and wood. Major suppliers are the USA, China, Indonesia, South Korea, and Australia.

Is Baidu embracing the desire not only to be the "China Google" but also the "Asian Google"?

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Baidu expands to Japan


Baidu announces a move into the Japanese search market.

This from Investors Business Daily:

"Cracking the Japanese search market could be tough. Yahoo is tops with 60% of the market. Google has about 35%, analysts say."

"By 2009, the paid search market in Japan will reach $1.2 billion, up from $290 million in 2004, says AUN Consulting, a Tokyo-based search marketing and research consulting firm."

Japan has 86 million people using the internet representing 67% of its population. It is the third largest internet search market behind the United States and China.

Observations:

If Baidu can wrestle away even 10% to 15% of the search market from Japanese market leaders Yahoo and Google that would equate to roughly $150 Million in additional revenues in 2009.

Does Baidu open itself up to possible prosperous partnerships /joint ventures in Japan that would be frowned upon in China?

Could the current 100,000+ advertisers within the Baidu network be directly leveraged within the Japanese market? In other words...would a certain percentage of the advertiser base within the Baidu network be able to sell directly to the Japanese search market. That would eliminate the need for a significant upfront sales effort in Japan.

If that statement is true...what percentage of the advertisers would be able to advertise directly to the Japanese market? 10%? 20%? That would equate to 10,000 to 20,000 advertisers.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Thursday, November 30, 2006

Baidu looking like a baby Yahoo?




Can looking back help us to look ahead? Looking at the 10 year Yahoo juggernaut we felt it appropriate to look back and view the early years.


Yahoo went public at $13 per share and soared to a high of $43 on its first day of trading. The stock closed at $33. As the chart demonstrates (split adjusted prices) Yahoo subsequently dropped approximately 50% from its opening day close of $33 per share over the course of 3 to 6 months. It rebounded, built a base and broke out to new closing highs 14 months after going public.

We find this pattern to be similar to Baidu.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, November 29, 2006

Baidu in 2007, 2008, 2009

Our summary:

An increase in overall Chinese internet users:

Currently 123 Million
2007 140 Million
2008 161 Million
2009 177 Million

This secular growth trend should obviously translate into higher traffic.

2007
Q1 Revenues $39.2 Million
Q2 Revenues $44.7 Million
Q3 Revenues $52.3 Million
Q4 Revenues $64.5 Million

Total Revenues $200.7 Million

Q1 EPS $.37
Q2 EPS $.43
Q3 EPS $.52
Q4 EPS $.64

Total EPS $1.96

88% revenue growth over 2006
96% earnings growth over 2006

2008
Q1 Revenues $72.9 Million
Q2 Revenues $84.5 Million
Q3 Revenues $97.2 Million
Q4 Revenues $108.9 Million

Total Revenues $363.5 Million

Q1 EPS $.76
Q2 EPS $.90
Q3 EPS $1.04
Q4 EPS $1.19

Total EPS $3.89

81% revenue growth over 2007
100% EPS growth over 2007

2009
Q1 Revenues $119.8 Million
Q2 Revenues $134.1 Million
Q3 Revenues $150.1 Million
Q4 Revenues $169.6 Million

Total Revenues $573.6 Million

Q1 EPS $1.29
Q2 EPS $1.42
Q3 EPS $1.63
Q4 EPS $1.79

Total EPS $6.13

57% revenue growth over 2008
58% EPS growth over 2008

Forward PE on 2007 = 70
Forward PE on 2008 = 55
Forward PE on 2009 = 35

Price target for January 1, 2007 thru June 30, 2007 = $137
Price target for June 30, 2007 thru December 30, 2007 = $213

Based upon current information available. All subject to change based upon subsequent material changes to the business outlook.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Thursday, November 16, 2006

WR Hambrecht initiates coverage of Baidu with Buy


From Briefing.com:

"From Briefing:11/16/2006Baidu.com initiated with a Buy at WR Hambrecht- tgt $130 (103.26 ) : WR Hambrecht initiates BIDU with a Buy and a $130 tgt noting the co is the largest search engine in China, leveraging its large traffic volume to drive online advertising revenues. They believe the co is well positioned for expected positive trends, including the greater adoption of paid search by SMEs and brand advertisers, the growth of e-commerce, and the emergence of user-generated content. In addition, the firm says Baidu's local know-how and attentive customer service create barriers for its competitors. Lastly, the firm believes their long-term forecast could be too conservative based on a sensitivity analysis of SME adoption rates."

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, November 15, 2006

Baidu Bull Bear Debate


In this corner...sporting a dashing fur coat...Daniele Guerini.

Her BEARISH stance:

"Currently the market is betting on Baidu’s ability to deliver extraordinary growth in future years and even small disappointments can have a significant impact on the stock: the lowered guidance for 4Q 06 sent the stock down from $99 (market open on Oct 31st) to $84.8 (market close on Nov 1st).

We see the downside potential as higher than the upside and therefore we are shorting the stock. "

And in this corner...snitting and snorting ...Larsen Kusick.

His BULLISH stance :

"I believe Baidu has significant long-term potential (combined with above-average risks and volatility), but the action in the stock indicates higher prices sooner rather than later. Speculators looking for a stock that could eventually double or triple would be wise to move out of Google (GOOG - commentary - Cramer's Take - Rating) and into Baidu.

I like Google, but I don't see shares doubling in the next two years due to the already-high expectations on the stock."

YOU DECIDE!

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Monday, November 13, 2006

Baidu on the move

Recent price action suggests the following:

1. Institutional sponsorship. This move over the last week has been on heavy volume with marginal news (Eachnet). This adds up to knowlegeable people putting money to work.

2. The critical mass of advertisers (now well above 100,000) within the Baidu advertiser network equals considerable brand awareness that will lead to future network effect growth.

3. This enviable brand and market position held by Baidu will be a formidable barrier to entry for competitors.

4. The market knows that the recent adjustments to the bidding system will pay off in the intermediate to long term. The market is pricing this in.

5. Market sees '08 earnings on the horizon. Those POSSIBLE earnings have the number "3" in the front end. With that front handle the market knows that there is a significant possibility that the share price MAY have a "2" on the front end in the coming 4 to 8 months.

This has the earmarks of a QUIET walk up. When Mr. Retail sees this and jumps in is when it will be time to watch for a few weeks and then take some off the table.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, November 08, 2006

Baidu - Earnings - Deals

First off - I apologize for not updating the blog recently. I have had to take care of other pressing items.

Our earnings sweepstakes predicted $30.4 Million in Revenue (actual was $30.3 Million), earnings were predicted to be $.27 (actual was $.31), and opening price was predicted to be $88.50(actual was $86.25).

Rather stunningly accurate. The wisdom of the crowds apllied in this instance.

Baidu has subsequently announced a deal with eBay China's Eachnet.

We expect further deal making may be in the works as it has become apparent that Baidu is a force in the aggregation of all things Chinese.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Friday, October 27, 2006

Current Sweepstakes Estimates

The average of the the current 11 responses predict the following:

Revenues = $30.4
Earnings per share = $.27
Opening price day after earnings release = $88.50

Cast your guess!

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, October 25, 2006

Baidu Earnings Prediction Sweepstakes


Baidu will report earnings on October 31, 2006.

We invite our readers to contribute your prediction now! Click on "comments" below this post and let us hear from you. You don't have to provide your real name - aliases welcome.

THE WINNER will be highlighted here the day after earnings. You will live in infamy!

Here is what we ask you to provide:

1. Revenue Prediction
2. Earnings Per Share Prediction
3. Opening Price of Shares the Following Day

Feel free to comment further to make your case for the bullish or bearish point of view.

Here is our prediction:

1. $31.4 Million Revenue
2. $.29 Per Share
3. Open at $99.30 Per Share

Baidu will announce revenues should continue to track at 150% year over year in 2007.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Friday, October 20, 2006

Analyst believes "Search" may be a winner take all business


From a Stifel Nicolaus analyst recent comment:

"The probability that search is a 'winner take all' business is increasing with time, our opinion," said Analyst Marla Block.

Lets do some 2 plus 2 analysis of that comment.

The Analyst believes that the business of search will involve a dominant leader and then the much weaker and distant competition. In this case she sees Google as the far and away winner with Yahoo getting the scraps over time. She implies that as time goes on it will become a much better game for Google with Yahoo continually getting weaker.

PLUS

Google highlighted considerable strength within their international markets - EXCEPT CHINA.
Baidu has begun to widen its lead in China within the past year - CONSIDERABLY. Baidu has 62% of the Chinese search market versus 45% last year.

=

Google wins big in most if not all markets EXCEPT China.

Baidu wins in China

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

China, with 1.3 Billion people, has approximately 20% of the World's 6.4 Billion population within its borders.

Baidu is the search leader in China.

As of 2006 10% of China's population is online.

As of 2006 72% of the US population is online.

It was 1996 that the US reached 10% of the population online.

hmmm....

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Thursday, October 19, 2006

Google says international growth is great - except in China

Google released stellar earnings. They lauded their international growth. Singling out particular countries that experienced strong results.

China was not included within this list.

From Marketwatch.com:

Google Chief Executive Eric Schmidt said on a conference call late Thursday that revenue growth was particularly strong in the U.K., the Netherlands, Spain, France, Italy and Australia. He also noted that India and Brazil, which he considers emerging markets, were growing at "high rates."

Absent from Schmidt's rundown was any reference to China, where Google has been losing market share to Chinese search leader Baidu.com Inc.

What can we infer?

Baidu growing dominance as reported within the past few weeks has Google on its heels in China?

Baidu's cultural strengths and associated advantages are bolstering their position - making it increasingly more difficult for their competitors?

The viral growth of Baidu's advertiser network made possible by it's approach of "feet on the ground" sales is paying off exponentially.

Maybe Baidu is ready to take on a secondary financing event similar to the one Google's had last fall. Could there be an institution or two ready to take a large position through a secondary financing event? Or is there a large technology company or consortium of companies ready to invest / partner with Baidu?

Has The Street fully discounted 2007 earnings? Is a 50 forward P/E a "full discount"?

How will The Street react to 2008 estimates? What will 2008 estimates look like in 60 days?

If Baidu maintains 150% + year over year growth rates for the next 4 to 6 quarters what is a reasonable multiple on earnings? Cash Flow?

Will these growth rates actually do what many would never expect them to do...accelerate?

Google seems to be losing to Baidu. How will this play with major technology players and media companies in terms of partnerships / sponsorships / deals going forward for Baidu?

Good luck to longs and shorts alike.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Wednesday, October 18, 2006

Yahoo and eBay disappoint

Earnings from Yahoo and eBay have disappointed Wall Street. Their respective 2007 outlooks are tepid.

Google may be the big beneficiary as they continue to lead the way.

Will the cash leaving eBay and Yahoo move to Google?

Will the cash leaving Yahoo and eBay move to Baidu?

Stay tuned.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Friday, September 29, 2006

Big League positions in Baidu

It looks as though Baidu has hit the radar of many big hitters on Wall Street. SEC filings over the past 3 to 4 months indicate a significant increase in very large positions for some venerable institutions.

Among the notable institutions that have either initiated or substantially increased positions are SAC Capital, Fidelity, and Tudor Investments.

See this June 8th article related to SAC stake.

See Fidelity stake article.

See the Tudor investment 3 weeks ago.

Thoughts:

Does this mean it is up, up and away for Baidu share price?

Maybe it merely indicates that some very savvy players are loading up on a low float, emerging market dominant internet company.

Also, why did Google sell their small stake just as these these guys were initiating very large positions?

Pure speculation would be that there may be another tech player out there that may be ready to partner / invest in Baidu to gain a significant foothold in China.

Also, is it me or for every one Bullish commentary in the press or blogosphere regarding Baidu stock there are five that are heavily bearish. Contrarian indicator?

What do you think? Believe the USA TODAY writers or Steve Cohen and the folks from Fidelity and Tudor?

Hmmm.... I can't decide.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Thursday, September 28, 2006

Myspace worth $15 Billion? What about Baidu space?

Jordan Rohan states that he believes a realistic valuation for Myspace may be $15 Billion+ within three short years. A terrific ROI for News Corp.'s $580 Million 2005 purchase price.

He based the assumption on the basis of MySpace's "raw, unprecedented user/usage growth."

As reported last summer Baidu recently roled out its social networking hotspot. In an often hostile environment for foreign competitors it looks as though Baidu may be in the beginning stages of domestic Chinese social networking dominance. China MAY be the one market that Myspace will have trouble cracking.

Baidu valuation IF they can develop a Myspace type dominance in China?

Picture Google and Myspace...Chinese style.

Pass the fortune cookies.

No affiliation with any securities dealer, investment advisor, brokerage, or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Baidu competitors gaining ground?

According to a report by Credit Suisse as reported by Netanel Jacobsson it appears Baidu may be facing more competition than previously believed.

The report seems to refute the recent report citing Baidu expanding market share dominance.

He states:

According the a recent survey conducted by Credite Suisse, Baidu is the most often used search engine in China, but its user profile is the least attractive.

One reason is said to be that advertisers are spending more on other search engines for diversification, thereby limiting Baidu’s market share. China also has a lot of export manufacturers that are more likely to spend on global search engines rather than just on domestic players like Baidu.

In addition to Google specific competitors mentioned within the report include China Mobile and Microsoft.

THOUGHTS:

The point regarding export manufacturing advertisers is well taken. One would expect this subset of advertisers to focus on international search outlets.

A more cogent point about the Chinese internet poulation is that approximately half of the 123 Million Chinese netizens are below the age of 25. Therefore, Baidu as the far and away leader in China has an enviable position as THE search brand among the 60 Million plus internet users in China that are under 25 years of age. As this group develops affinity for Baidu so will the ability for Baidu to leverage this affinity thru continued monetization as this population develops economic strength.

Also, keep in mind that China has just hit the 10% mark for internet penetration (123 Million out of 1.3 Billion). The United States hit 10% penetration in 1996. It marked the beginning of the hyper growth that fueled the net boom within the United States.

China has just now...finally... entered the equivalent of 1996 in the United States.

No affiliation with any securities dealer, investment advisor, brokerage, or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Tuesday, September 26, 2006

Citigroup's Mark Mahaney comments on China

This handicapping from Citigroup's Mark Mahaney on the prospects for the United States internet Big three in China:

"All in all, we would call the Asia challenges to U.S. Internet companies a material, long-term issue, especially for eBay and Google"

Thoughts regarding the affect on Baidu:

Mahaney sees the increasing dominance of Baidu in the Chinese search market. The company is expanding its lead over Google and Yahoo. The advantages for Baidu in the domestic Chinese market are numerous. Cultural influences will most likely continue to carve a wedge between Baidu and the foreign competitors.

Raw analysis of the POTENTIAL for the Chinese search market is stunning.

* 1.3 Billion citizenry
* 9% + GDP growth

Potential number of Chinese internet users within a decade has been pegged by some at 400+ Million. An absolutely astronomical number. Admittedly, the Chinese economy is not in the class of the United States. The internet search market is in its infancy in China.

Is it any wonder that many agree that Baidu is pulling away from the pack just as the Chinese internet population begins to be handed the tools to engage in ecommerce on a grand scale. This is not a 2 or 3 year "play". Some of the most savy investors see this as a decade long "play".

The long term beneficiaries will be investors that see the long term potential of this secular growth trend within China. Companies like Baidu rarely ever trade at close to their respective growth rates - let alone a discount to that growth rate.

No affiliation with any securities dealer, investment advisor, brokerage or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Monday, September 25, 2006

Citigroup raises rating on Baidu

According to the theflyonthewall.com Citigroup has just upped its rating of Baidu. Obviously the stock price will reflect this fact for the coming days.

Thoughts:

1. The end of September is when many funds close their books for the year. This is the last week of September. Citigroup is front running an obvious play to bump up Baidu stock to help fund managers performance for the year. Keep in mind Baidu was trading as low as $45 per share six months ago. You get the point.

2. After this event Baidu will most likely cool over the next few weeks leading up to earnings. Earnings should be very healthy and a breakout to new 12 months highs should occur with 3 to 5 weeks. The chart is pointing to further gains.

The three major US stock market indices are in positive territory for the year. The severe drop in commodity prices (especially Gold) is a harbinger of a stealth stock market rally. See the 1995 collapse in the price of Gold as a similar market occurence.

No affiliation with any securities dealer, investment advisor, brokerage, or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.

Monday, September 18, 2006

Baidu finds Chinese search engine dominance

Over one year after its stunningly successful stock market IPO Baidu is finding itself to be one hot commodity. Google and Yahoo are quickly fading in the rear view mirror as Baidu stretches its lead in the Chinese search engine market. According to a recent study Baidu can claim an estimated 65% market share - all at the expense of International Search Brands Google and Yahoo. See Red Herring article.

After an obviously unsustainable surge in Baidus stock price on the initial day of trading it has quietly carved what appears to be a very healthy base. Stealth accumulation of the stock has occurred since late spring / early summer. Some very notable big hitters on Wall Street have garnered huge positions of late. Very similar activity took place within past internet big movers 6 to 12 months prior to stellar multi year moves. One notable example from the past was Fidelity Investments initiating a huge stake in Yahoo throughout the spring and summer of 2002 - just prior to a multi year 6 fold increase in price. We see very similar patterns with Baidu recently.

No affiliation with any securities dealer, investment advisor, brokerage, or stock market. This information is opinion only and should not be solely relied upon for any investment decision. All investment decisions are the responsibility of the reader. Invest at your own risk.
eXTReMe Tracker