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Baidu, Inc. Message Board

  • bobdavis4 bobdavis4 Apr 23, 2013 12:58 PM Flag

    Why Baidu Is Poised to Bounce Back By Brian Pacampara - or why BIDU WILL RISE

    From the article:

    - Success begets success. Baidu is the dominant search engine in China, with nearly 3/4 of unique search visits. As Google proved in the US, users will gravitate to the most efficient product that provides the best search results. This, in turn, attracts more advertising revenue. The network effect, in full effect.
    - Baidu has had a successful initial campaign into mobile, accounting for ~50% of mobile search in China. They are investing heavily in this platform, trying to maximize user experience. Deals with China Telecom and China Unicom have been negotiated for Baidu to be the default search provider.

    Risks include potential up-and-coming search competitors. ... A friend of mine living in China said that [Baidu] was the more "formal" search engine, but that there were in fact others that users would sometimes go to instead (the example he gave was to find pirated mp3s). From at least this one perspective, it seems that Baidu has a strong business reputation for search in China.

    Consensus estimates for 2013 earnings are $5.34, which puts Baidu's forward P/E at only 16. But this is a growth company with tons of potential ways to monetize (optionality), and I believe the valuation to be far too low.

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