On the surface, it seems that Google pulling out of China is unambiguously positive for Baidu. However, I am a big believer in seeing past the obvious so I tried to think of a scenario where this is at best neutral for Baidu.
Consider this - Baidu already controls 80% of the Chinese search market with Google a distant second. Take a look at the two sites and you will see they are the same site with a different name. So my explanation for the huge difference in marketshare is nationalism by the Chinese. They would rather support a Chinese company as opposed to a US company.
So what really changes on a Google pull out? The .cn version of their website is taken down. However, Chinese internet users (based on my understanding) will still be able to have access to Google.com.
My point is this - those that already use Google do so for reasons beyond functionality. The fact that Google is standing up to the Chinese government may very well be seen as a positive with those users and encourage them to find ways to continue using Google's search engine. I could be wrong, but it has been my experience that nothing is ever so obvious and it pays to think of other outcomes.
In full disclosure, I am short BIDU via the April 550 puts but only because I expect a mean reversion trade. An uptrend channel going back one year was broken to the upside as Baidu went parabolic recently. That usually signals a trade back within the channel. Also remember, the best news always occurs at the top.
BIDU to initiate secondary offering? Now that the share price is so high, BIDU might take advantage of this fact by raising capital in a secondary offering. it makes sense. The initial IPO was for $400 million, but today they could easily sell $5-10 billion worth of new shares.