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Baidu reported near-record Q1 2011 financial results on April 27, 2011
Baidu Overview
Baidu Baidu closed the week at $134.69 on Friday, May 20, 2011. BIDU was up +2.60% for the week, is down -9.31% for May, and is up +39.53% for 2011. BIDU is -11.60% below the all-time closing high reached on Tuesday, April 26, 2011 of $152.37.
S&P 500 By comparison, the overall market, the S&P 500, at 1333.27, was down -0.34% for the week, is down -2.22% for May, and is up +6.01% for 2011. SPX is up +97.07% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1363.61 on Friday, April 29, 2011, the highest close since the June 9, 2008 close of 1404.05, and is now -2.22% below that peak. BIDU is easily outperforming the overall market in 2011. A review of the S&P 500 is here [S&P 500 Continues Below 20-Day Average (Chart) *Down 3 consecutive weeks*]
Baidu Fundamentals Baidu reported near-record Q1 2011 financial results on Wednesday, April 27, 2011, but the bar has been set high for Baidu in the world's largest Internet market. These financial results are reviewed and analyzed on this blog at the Baidu Financial Performance page. This was after stellar fourth quarter 2010 financial results on January 31, 2011.
Baidu News (1) There is the possibility, rumor, that Microsoft Bing may partner with Baidu. Baidu would manage the paid ads on Bing China and Bing would provide English search results for Baidu. (2) There has been controversy regarding Baidu allowing illegal MP3 music downloads via Baidu MP3, a music search service that allows users to search, stream, and download (copyrighted) music free of charge. Catherine Leung of Baidu stated on May 7, 2011, "Copyrighted music will be the direction of Baidu's music business in the future, and our music-search service will also be based on legal content." The International Intellectual Property Alliance (IIPA), which represents the United States' copyright industry groups, testified at a USA Congressional hearing on Wednesday, May 4, 2011, that Baidu had "serious infringement problems". (3) Baidu had a 75.8% search market share in China for the quarter ended March 2011 per Analysys International. Google is second with a 19.2% share. Google has redirected its China traffic to Hong Kong since a censorship conflict with the Chinese government in 2010. (4) FWIW Department: Unidentified Chinese residents, as plaintiffs, have sued Baidu and the Chinese government for $16 million in a Manhattan, New York federal court for censoring Internet information. (Zhang vs. Baidu.com Inc., Southern District of New York, Manhattan) China requires websites to self-censor pornography, gambling, and content critical of the ruling Communist Party. No USA court has jurisdiction in these matters and the lawsuit is symbolic, even if a default judgment was obtained. China blocks Google's YouTube, Twitter, and Facebook, among many other websites.
Economic and Market News Information about the USA and world economies plus the USA financial system are posted at Boom Doom Economy, Financial Controls, and Baidu Planet. Additional current commentary on both the overall stock market and economy is posted at Matrix Markets.
Baidu Daily Chart Below is the BIDU daily chart since February 11, 2011 to illustrate recent price interactions.
Noteworthy Closing Prices
Current Close: $134.69
2011 and All-Time High: April 26 $152.37
2011 Low: January 3 $99.73
YE December 31, 2010: $96.53
Baidu Chart Review
Intermediate Term Trend descending 25d sma greater than ascending 50d sma, BIDU below 25d and 50d avgs, neutral/bearish
Long Term Trend BIDU greater than 10 month ema = 115.46, bullish since April 2009
Key Resistance 50 day avg 138, 20 day avg 141, sub-peaks 142-143
Key Support at support 134-135, prior all-time high 130, 128-129, 100 day avg 126
Moving Averages below 20d, 50d avgs; above 100d, 200d averages
RSI 14 Day = 32.36 is oversold, level
RSI 28 Day = 41.28 is near oversold, descending
MACD (12,26,9) = -1.23, ascending
Volume low 5.9M latest day, 50 day average = 8.4M
Price Earnings Ratio = 74.38, has been high 90s to low 100s in past year (Google Finance)
Market Capitalization = $46.98 billion (Google Finance)
Conclusion Baidu dropped below the all-time closing high on Tuesday, April 26, then below the 20-day moving average, and now continues below the 50-day average. BIDU reached extreme oversold levels late last week and early this past week and has bounced up. Undoubtedly, the accusations against Baidu for copyright and intellectual property infringements have caused investor concern (see Baidu News above). The bar has been set high for Baidu in the world's largest Internet market and many investors were hoping Baidu would report record financial results for Q1 2011, but this was after Baidu reported incredible financial results on January 31, 2011 for the Q4 2010. Q4 is normally the annual cyclical high for Internet and technology sector companies and Q1 is the annual cyclical low. Therefore, Baidu's Q1 2011 financial results were amazing, but, again, investors were hoping the growing Chinese Internet market would push Baidu earnings to yet another all-time high regardless of the annual cycle. These financial results are reviewed and analyzed on this blog at the Baidu Financial Performance page.
Disclosure We are long BIDU.
About Baidu
Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol "BIDU".
The Baidu Story
Many people have asked about the meaning of our name. "Baidu" was inspired by a poem written more than 800 years ago during the Song Dynasty. The poem compares the search for a retreating beauty amid chaotic glamour with the search for one's dream while confronted by life's many obstacles. "…hundreds and thousands of times, for her I searched in chaos, suddenly, I turned by chance, to where the lights were waning, and there she stood." Baidu, whose literal meaning is hundreds of times, represents persistent search for the ideal.
Baidu chose a poetic Chinese name because it wants the world to remember its heritage. As a native speaker of the Chinese language and a talented engineer, Baidu focuses on what it knows best - Chinese language search. Applying avant-garde technology to the world's most ancient and complex language is as challenging as it is exciting. At least people here at Baidu think so. As having diligently disclosed in the Prospectus of our recent Initial Public Offering, we believe there are at least 38 ways of saying "I" in Chinese. It is important that we master all the ways of addressing oneself in Chinese because our users depend on us to address every one of their daily queries. And trust us, pin pointing queries in the Chinese language is an art rather than a science.
Our mission is to provide the best way for people to find information. To do this we listen carefully to our users' needs and wants. Have we collected all the Chinese web pages they want to see? Are the pages current and up to date? Are the search results closely related to their queries? Did we return those search results instantly? To improve user experience, we constantly make improvements to our products and services. For example, we introduced "phonetic" or "pin-yin" search which allows our users to type in Chinese keywords using English alphabets. This feature is designed to skip the switching from English inputting to Chinese inputting and for when the user is not sure of the written form of a keyword. Our users definitely notice the many little things that we do differently to ensure a simple and reliable search experience every time.
In addition to serving individual users, we also serve as a media platform for online marketing customers. We not only provide our customers easy access to one of the largest online audiences in China but also targeted groups with defined interests as indicated by queries. Unlike traditional online advertising services which charge by flat fee, our marketing products and services are performance based. Our Pay for Performance model has taken the market by storm because it is cost effective and measurable.
We know that a lot of interesting things are going on in the Internet space, but we don't want to lose focus. China's Internet search industry is only a newly discovered territory. We see vast untapped grounds in our home base and we believe there are still plenty of prizes to be claimed by the best players.
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