Don't believe in Baidu's high profit margin: that's just accounting trick. Look at global market shares: Baidu vs Google, and Market Cap of Baidu vs Google: baidu is too much overvalued. BIDU worth no more than $50 per share.
Overvalued? Do you know something about accounting? In comparison with google, Baidu have a growth rate of more than 50% and year to year of 100%. With a profit margin of 50%, ist could be way undervalue. Just look American companies with the same growth or even other Chinese ones. For this type of companies normally is 45 times earnings.
When BING took 10% of US search market from Google, Google was not hurt because Google has strong growth in Global market, also Google has too many new products in Mobile and Cloud computing. But if Baidu's 10% market in China is taken by some body else, baidu has no other market or products to compensate that loss.
It's not about QIHU, it's not about China's economy, it's not about Baidu's losing money in Japan. It's not about what Baidu did something wrong. It's about baidu didn't do something quickly and heavily.
Wall Street doesn't like Baidu because baidu working on Mobile and Cloud too late and too little. Period.
First of all, Baidu only works in China. Second, how much growth and profit margin have baidu in comparison to google?
Google Net Income = 9b. Baidu net income = 1.2b. Net income Growth over year Google: 14%. Baidu: 100% Market Cap is 5.7 (230b) to 1 (40b) . Now make your own calculations and look, which have huge potential. Apart of the new Baidu Cloud and Baidu phone which were introduce recently.
Also, get your number right: 100% growth was the past for BIDU, BIDU's growth is decelerating, Q2 only 59%, Q3 will be just 50%, next year 30%, by 2014 it's just 20% or below.
GOOG growth is around 20% stable.
Baidu's gross profit only 1.68 B, Google's gross profit 24.7 B.
Google has total cash 41 B, Baidu has only 2.8 B.
Also, I can smell that Baidu Cloud and baidu Phone will be just burning cash for Baidu.
And the most important, Baidu only can make money in China, that's not a good thing for investors. (You try to convince me baidu only works in China is good thing for investors?) Baidu tried to do business outside of China, such as Japan, but never made any money. Just burning cash.