Analyst: Why Google Will Soon Steal Share From Baidu In China

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Analyst: Why Google Will Soon Steal Share From Baidu In China

In China, Baidu (NSDQ: BIDU) is the undisputed king of search, now controlling 60 percent of that market. But Credit Suisse analyst Wallace Cheung says its dominance will start to slip in the next few years, at the hands of Google (NSDQ: GOOG) and e-commerce site Taobao. In a report issued today, Cheung says Baidu’s share will drop from 59 percent in 2008 to 55 percent in 2009 and 51 percent in 2010. Meanwhile Google’s share increases from 23 percent in 2008 to 33 percent, and Taobao’s share runs from 1 percent to 11 percent.

Cheung offers a couple reasons for the changes in market share, which is after the jump.

—Google will gain share from higher growth in search traffic as it optimizes its service in China, forms partnerships, and builds its salesforce, which is largely seen as the best in the business. In addition, Google is launching search products for music, mobile, and maps this year.

—Online shopping site Taobao should gain share because Cheung points out that most Chinese don’t use search engines as their primary shopping source. In fact, 44 percent of respondents in a survey performed by Credit Suisse said they used Taobao rather than a search engine for their shopping needs. Only 22 percent said they used Baidu. Over the next few years Cheung believes this will grow as Taobao bolsters its offerings.

Baidu reported strong first-quarter results and said the second quarter would be strong too, but it’s tough to bet against Google in search. The only question seems to be whether it will be able to grow its share (at Baidu’s expense) as quickly as Cheung predicts.

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Rory Maher Apr 30, 2009 2:48 PM ET

Posted In: Advertising, Entertainment, Media & Publishing, Companies, Google, Countries, Asia, China

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RJ Disputa

Just seeing the responses tells me you folks do your homework. That is how you accumulate gains in your portfolio. Read articles like these, learn the slant these individuals put on these stocks and understand their motives. I see their are folks who are upset they don't own more shares. I have my own online account. Don't be afraid to buy 5 or 10 shares at a time. Buy what you can afford. You never know what the future brings in these environments. BIDU could go up 50 or down 50. Don't be discouraged. If in your heart you feel this is a good investment, stay with it. But always remember to take some profits off the table. Good luck to all.

Anne Downes

I bought 100 shares of Bidu when it was below l00.00. I have had to sell all but 25. I only wish I had been able to buy more. Wish you had a drip program.

Thanks Bidu and good luck—-the heck with google. Bidu is China and tell the people to buy Chinese..

Fringebenefit

It has become quite obvious, R J DISPUTA, why, exactly these nay-sayers are bashing BIDU. They are attempting to drive down the share price to get their clients in "at a good price." Personally I am not worried. BIDU is the best in China; has been and will remain to be. If the price drops (again) I will simply buy more. My guess is these nay-sayers are kicking themselves for not having bought in back when the price was in the low one-hundred dollar range! Well, I did, and I'd gladly purchase more!

Rich

Please consider BIDU's community function and ask Baidu function which are very popular in China. Frankly, BIDU works kindly as Yahoo - need to add websites munally that is not as good as GOOG.

Believe me, Chiense government can not have GOOG dominate Chinese market. They may block GOOG as that of Youtube.com if needed.

Thanks BIDU, I almost make even in stock and I shall hold it to $400.

bidu to 300

GOOG to BIDU in China is like comparing GOOG and Ask.com in the US.

Case closed

RJ Disputa

I watch these characters like a hawk. These BIDU bashers are the same bunch that hammer ISRG, FSLR, RIMM, AAPL and a few others. If folks took their time, ignored the cable tv frauds, ignored the anal-ists and did their homework they would make money. I always have bought and held and applied dollar cost averaging. It still applies today.

Ajoy

Wallace Cheung has been saying this for the last 3 years, ever since Baidu
IPOed. First it was, Google has it's servers outside China; once they move them
to China, they will capture the market. Then it was, Google will add licensed
music and the world will be theirs. Google has money; google never loses; google should not be challenged. Google, google, google.

CS should have fired this guy a long time ago. All the other analysts who once
used to say the same thing have come around. Including Goldman.

Mr short

It's the same moron bashing bidu from $100 bottom and bashing SNDA from $30 (now $50): http://pulse.alacra.com/analyst-comments/Wallace_Cheung-A1942 . Hey genius, could you ever try to do sth with any credibility?

Deborah

Mr. Disputa hits the nail right on the head. Whoever he is or works for should be handling my portfolio. I see a strong message with facts that parallel all the research I have done. This Cheung and Maher sound like all the short whiners I see on all the Yahoo message boards. Nothing but BS all the way. Feeble facts with old tired comments. Nobody is buying it. I think I'll buy a few more shares.

Robert

I totally agree with RJ Disputa….they'll fail, nobody ever can undermine Baidu's success as nobody can screw Google in EU & U.S.
nice but cheap try credit suisse…all u achieved was undermining ur own credibility

RJ Disputa

Everything this analist is claiming is exactly the opposite of what is happening. BIDU is a brand name in China. GOOG is second fiddle. The Chinese most definitely will partner with BIDU 1000% faster than GOOG. They see GOOG as an American company trying to infiltrate the Chinese culture. Everything he claims is exactly what BIDU is doing, and doing better. Forming partnerships and building its saleforce also. Whoever "claims" anyone is the best in the business sound like they work for GM or Chrysler. Again another survey…Credit Suisse reminds me of UBS-United Bull $#$##@#$. They recently (last week) downgraded BIDU to $150. Why are these people so dreadfully afraid of BIDU's spectacular growth? This all smells fishy to me, especially the fact a gentlemen named Cheung makes the claims. But as we all know, their have been feeble attempts to undermine BIDU since day one. I don't buy it, and I have 35 years in the market. Nice try little fellow. We shall see….we shall see.