Bidu was raising capital to buy competition recently
They have lost $10 billion in market cap since Qihu has started eating up their market ..
It would make good sense to buy out Qihu before they get too big... If they used $10 billion to buy Qihu, they would likely make it back in cap, they would bolster their earnings and take out the only true competition in their market.... $10b would puts us at about $80 a share... Remember who said it first...
Personally, I don't believe Bidu will make a bid for Qihu 360 anytime soon (if ever), owing to the animosity between the founders at each of the companies. However, it appears that Qihu 360 may easily take 15-20% of the search market segment inside China by the end of 2013, which is to say, eating 5-10% into the current Bidu's market share. For mobile search, it's a brand new market for any company inside China, that includes both Bidu and Qihu 360. In this new market, Qihu may take a leadership role. For the mobile search market alone, Qihu may command a higher premium in P/E multiples, that can see its PPS double within a 12 month period.
In the near term, the "strategic" alliance between GOOG and QiHU will be a strong catalyst to propel its PPS higher into the mid 30s. According to a report, Qihu 360 recently confirmed this arrangement to Zdnet. On the day this arrangement is officially annouced, one may expect to see its PPS north of $35.