Bottom line: Resolution of Baidu‘s dispute with a one of its top clients, combined with declining profits, reflects a new reality that is seeing its pricing power erode as it faces growing competition from both search and non-search service providers.
Exec confirms Baidu settles Putian dispute
A new report is confirming that leading search engineBaidu (Nasdaq: BIDU) has quietly settled a dispute with one of its major advertisers, which shaved nearly 15 percent off the company’s stock at the time. But the dispute is clearly have some lasting damage on Baidu’s share price, reflecting the reality that new challenges from rival search engines and also from non-search services like Tencent’s (HKEx: 700) WeChat may be undercutting Baidu’s ability to command huge premiums for its advertising services.
Baidu’s misery in China’s stock Markets
Adding to Baidu’s misery is the recent plummet in China’s stock markets, which has fueled a concurrent drop in overseas-listed Chinese tech stocks like Baidu. That sell-off saw Baidu’s shares dip more than 5 percent in the last 3 trading days of last week. That fall shaved off nearly $4 billion from its market value, as its shares reapproached levels last seen during the stand-off with the Putian Healthcare Industry Chamber of Commerce that broke out in late March. Read Full Post…
Bottom line: Baidu may never recover the medical advertising business it lost during a recent spat with a major hospital group, putting pressure on its stock as its revenue growth takes a hit over the next few quarters.
Baidu stock takes beating in hospital tiff
A spat between leading search engine Baidu (Nasdaq: BIDU) and one of its largest advertisers is taking a toll on the company’s stock, and also casting an illuminating spotlight on the nature of the advertising market in China. If the latest reports are correct, the boycott by members of the Putian Healthcare Industry Chamber of Commerce could be costing Baidu millions of dollars in lost ad revenue each day, underscoring the importance of such advertisers.
The tussle also reflects the strange nature of China’s advertising market, where ads making inflated claims are quite common. Many outsiders may also find it strange that hospitals are such an important source of advertising revenue in China, since such ads are far less common in more developed markets. The bottom line is that exaggerated ads and strange advertisers are the norm in China, but such revenue sources for companies like Baidu could shrink as the market starts to mature and more closely resemble the west. Read Full Post…
