Tuesday, May 09, 2006

Baidu's Earnings Jump

Baidu reported a faster growing quarter, a steller quarter indeed.

More significantly, Baidu is clearly seeing a steamy pick up in the search market in China. With a projection of 40% quarter over quarter growth for the next quarter, it is clear that April has been a very very good month that have boosted Baidu's confidence.

IPO at $27 and sebsequently rose to as high as $150 per share, many short term investors have been frustrated by Baidu's stock performance in the following months. It is safe to say now, long term investors will be awarded. We could see the price go to $120 to $150 pretty soon.

With an economy growing at 9% clip a year, and a small starting base, we see tremendous oppertunity ahead of Baidu. Addtionally, Google's entrance in the space so far has failed to erode Baidu's commanding lead. However, Google's marketing push may have helped innoculate the search market sector in China and thus benefited Baidu in the short term.

Even with Google's growing competition, there is just plenty space in the Chinese internet market where people do not see any needs for information in lauguages other than Chinese.

In September 28 2005, I have wrote "put number in perspective", a comparison between Baidu and the young Yahoo. In fact, by next quarter, Baidu will leapfrog Yahoo at the same stage. Guess what, by that time, Wallstreet valued Yahoo at $6 billion a piece and that was before Yahoo moved onto another 100 fold appreciation in the following two years. Oh well, it was the bubbling years :)


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