Saturday, June 18, 2011

Baidu Tests 200-Day Average (Chart) *Down 7 of past 8 weeks* BIDU

● Baidu Planet 

Baidu reported near-record Q1 2011 financial results on April 27, 2011, following record Q4 2010 financial results reported on January 31, 2011

Baidu Overview

Baidu Baidu closed the week at $117.68 on Friday, June 17, 2011. BIDU was down -3.30% for the week, is down a staggering -13.29% for June, and is up +21.91% for 2011. BIDU is -22.77% 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 1271.50, was up +0.04% for the week, is down -5.48% for June, and is up +1.10% for 2011. SPX is up +87.94% 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 -6.75% below that peak. BIDU is easily outperforming the overall market in 2011, but has underperformed in recent weeks. A review of the S&P 500 is here [S&P 500 Barely Snaps 6-Week Losing Streak (Chart) *Up +0.04% for week, down 5.48% for June*]. 

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 See below in this post.

Economic and Market News Information about the USA and world economies plus the USA financial system are posted at Boom Doom EconomyFinancial 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 1, 2011 to illustrate recent price interactions subsequent to the gap up on the record Q4 2010 earnings reported January 31, 2011.

Noteworthy Closing Prices
Current Close: $117.68
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 less than descending 50d sma, BIDU below both 25d and 50d avgs, very bearish
Long Term Trend BIDU greater than 10 month ema = 116.02, since April 2009, tenuously bullish
Key Resistance at resistance, 20 day avg 127, prior peak 130, 100 day avg 130, 50 day avg 136, sub-peaks 142-143
Key Support 116, 200 day avg 116, 114
Moving Averages below 20d, 50d, 100d avgs; above 200d avg
Uptrend Line well above, not shown
Downtrend Line below since 6-3-11; line from 4-26-11 all-time closing high 152.37 to 6-2-11 peak 138.49
RSI 14 Day = 34.78 is oversold, descending
RSI 28 Day = 35.77 is oversold, level
MACD (12,26,9) = -0.88, ascending
Volume above normal 11.4M latest day, 50 day average = 9.2M
Price Earnings Ratio = lower 64.68, has been high 90s to low 100s in past year (Google Finance)
Market Capitalization = $41.05 billion (Google Finance)

Conclusion Baidu peaked at the all-time closing high of 152.37 on Tuesday, April 26, then dropped below the 20, 50, and 100-day averages in May and June. The ascending 200-day average was successfully tested on Thursday, June 16 and BIDU bounced upwards, but additional tests appear probable. BIDU has dropped along with the equity markets and technology stocks. Recent SEC actions against and investigations into Chinese "reverse merger" stocks [Regulators Scramble to Warn on Chinese Stocks] have increased investor concern, although BIDU is not specifically questionable. Chinese stocks in general have fallen out of favor with investors. In addition, accusations against Baidu for copyright and intellectual property infringements have caused investor concern and exacerbated Baidu's price drop. 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.

Baidu News (1) There is the possibility 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. Additional partnerships between Microsoft and Bing are possible as Baidu pushes for expansion outside of China. (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. 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.

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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