Wednesday, September 14, 2005

Baidu's Price To Surpass Google's?(9/12/05)

In recent days, Baidu's IPO fairytale makes people dizzy. First day of trading, it was closed at $122.54 but have surpassed $150 at one moment. We have seen the stocks retreated. However, it's quite possible to see Baidu's price to surpass Google's. Baidu's future looks quite bright.

From the basic culture point of view, Google owns three core values: An internal culture that weighing heavily on personal pride and creativity; the management's experience and desire of serving the "long tail" of customer base- small and medium businesses; and the extraordinary core technology of search.

For example, Google stresses the equality, whether it is between the employees or between the customers. The company claims uniform stand against anything "evil". From this point of view, Baidu's bidded ranking system(similar to Overture's) is probably not compatible with Google's culture.

On ther other hand, comparing Google's three core values, Baidu also owns special core technology in Chinese search as well as the special advertisement model that is very profitable in the special case of China. This is very attractive to Google. Regarding the aspects of the company's internal culture as well as the management's beliefs in how to run the business perfectly matched the majority factors of Google's core values.

From the point of growth, Baidu has clear advantages. The more conservative style of managing the IPO reflects basically the way how Baidu values itself. Comparing with Google, Baidu is still a "small cap growth stock". So, there's still room for Baidu to move up and continue a strong up trend.

Technically, some of the stock has been bought by strategic investors including some of Baidu's competitors. These investors are not looking for short-term profit. When the short-term profit-takers left, the strategic investors worldwide will be the major force behind Baidu's stocks. At the same time, Baidu's value will be further analyzed and the long term investment value will be reflected.

Besides, Baidu's unique position in China, it's leadership and customer base has been drawing attentions from multi-nationals such as Google and Microsoft for quite some time. Especially after the merger between Alibaba and Yahoo, there are more merging opportunities ahead of Baidu. These rich opportunities are important factors to support the stock price and can bring in many speculations at the same time.

"Google", and "China", Baidu owns both of the two hottest capital concepts. We can see a good future for Baidu from here.

Feng Sun from

the article in Chinese


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