Another search engine stock winner

[Larwee]

Baidu is the leading search engine in China. Its stock more than quadrupled on Friday, as the stock made its debut.

The initial public offering price of baidu.com was $27.00. It closed Friday at $122.54, a gain of 354 percent.

Google even owns some shares of Baidu stock. To be exact, 749,625 shares. Google has an interest in the Chinese market and some are speculating that because Google owns some Baidu stock they have plans to eventually buy Baidu. But that is just specualtion for now.

The opening day climb by Baidu on Friday was the largest for any Initial Public Offering since March of 2000 when software maker Selectica Inc. rose 371 percent to $141.23. This was during the final days of the dot-com boom. It is interesting to note that on Friday Selectica closed unchanged at $3.15. Obviously Selectica isn't as hot now as it was in March of 2000.

[Czar]

That's an amazing rise. Congrats to those investors who decide to sell while the Google speculation is still in the air, before the buzz deflates.

Baidu seems like a good opportunity for Google, but the company makes very, very little revenue (less than $2 million last year) and could easily be crushed by Sino or Sohu, particularly if the other US heavy-hitters - Yahoo and MSN - develop strategic alliances with Baidu's more experienced competitors.

If Google is still considering an acquisition, they'll want to kill speculation as much as possible during the coming months so as to bring the company's valuation back down to a more appropriate level before they leap in with an offer. Still, I'm not sure that they'll bother to move beyond a token investment; unless over-regulation makes it impossible for them to do business effectively through Google's Chinese office.

[georgec]

Baidu IMO is way overvalued, and I'm tempted to say it just might become the poster child of the next dot com bust. This based on Baidu current revenue, but more importantly, its potential growth in the next few years in a very elusive market that is China. Baidu isn't Google version II that's for sure. The technology, execution, and potential growth revenue wise just isn't there, at least not presently.

[Larwee]

The IPO has created 200 new millionaires.

It will be interesting to watch and see how things go with Baidu. Being the largest search engine in China might help, but China has a small search engine market which does have potential for growth.

Depending on what happens, there might eventually be 200 former millionaires as a result of Baidu stock falling if things don't go the way they hope. http://today.reuters.com/news/NewsAr...A-BAIDU-DC.XML

[Czar]

It looks as though sanity is already creeping in to the market for this stock. The big gain has already been reduced dramatically, with the stock's price falling from approx $154 to $115 during the past two days.

Looks as though investors did learn a little from the "irrational exhuberance" of times gone by, after all.

Even the still-optimistically valued Google stopped its climb at a relatively reasonable level recently, which will hopefully save the online marketing industry from another public relations meltdown of the type that resulted from the dotcom crash. Phew!

[Larwee]

The Baidu high was $153.98 on August 8, 2005. Yesterday it closed at $74.18 and is expected to drop some more. But still, the initial public offering price was $27.00. At the moment it is safe to say that Baidu stockisn't performing as well as Google.

Insiders will be allowed to sell another 3 million shares, which will make more shares available to the public.

The hope is to make the stock more stable so that it will attract institutional investors.

http://today.reuters.com/investing/f...59_N13302312:1

[Czar]

Just to update this thread, Google sold its remaining stake in Baidu last Thursday. The big G obviously no longer sees Baidu as its safe pathway into China and will likely be taking a more direct route into that emerging market.

[Larwee]

Google had about a 2.6 percent stake in Baidu. Google obtained their stake in Baidu in June of 2004 for 5 million dollars. Google called it a modest stake. On the date of Google's sale of their modest stake, it was worth 63 million dollars. From 5 million dollars to 63 million dollars in two years isn't bad.

Google has established their own operations in China, but Baidu is still leads in China. Right now Baidu is the Google of China.

Here is a link to an article with some additional details http://abcnews.go.com/Business/wireStory?id=2107550