Analyst: Baidu Won’t Take Long-Term Hit From Strike
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A two-week strike by Baidu’s salesforce that has yet to be fully resolved won’t be a big drag on the company, according to Goldman Sachs analyst James Mitchell. In a note to investors, Mitchell says that even if some salespeople wind up leaving over the pay cuts—which is what sparked the strike earlier this month—the search engine won’t be seriously impacted.
He says that Baidu’s salesforce has grown to be very large (around 3,900), thanks to acquisitions, and could use some pruning anyway. Since 2005 the company has reduced sales and marketing expense as a percentage of revenue from 24 percent to 13 percent, and Mitchell expects more cuts to come—down to 9 percent by 2012.
SEE ALSO: Workers At Baidu Call Halt To Strike—For Now
Over time, he says, the sales process at Baidu (NSDQ: BIDU) will become more automated, like paid-search companies in more-developed countries, which would also decrease headcount anyway. Workers at Baidu halted their strike earlier this week while they await a formal response from the company.
Posted In: Advertising, Companies, Google, Countries, Asia, China
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