Bottom line: Baidu’s opening of a new artificial intelligence lab in Silicon Valley is the latest move in its AI obsession, which is likely to end in failure and a quiet pullback in around two years due to mediocre execution.
Baidu in new Silicon Valley R&D lab
I’m officially dubbing Baidu (Nasdaq: BIDU) chief executive Robin Li the “two-year attention span man”, with word that the company is setting up a new Silicon Valley office in the rush to build up its artificial intelligence (AI) capabilities. If any one of China’s “big three” Internet chiefs deserves the title of “short attention span” man, it’s most definitely Robin Li. As far as I can remember, Li has been a “flavor of the moment” guy who fixates on the latest daily hot trend, most often to jettison the idea around 2 years later when it falls out of fashion. Read Full Post…
Bottom line: Baidu will raise the valuation of iQiyi as it sells the unit to outside investors, in a bid to avoid insider dealing accusations, while it will also suffer a revenue hit as it evicts advertisers who operate illegal gambling sites.
Baidu under fire for low iQiyi valuation
Internet search giant Baidu (Nasdaq: BIDU) can’t seem to catch a break over the past week. First the company was hit by reports of a major rejection in Hollywood, and then an investigative report revealed it was hosting links to illegal gambling sites. Now the company is being rejected again by US investors, who are complaining that Baidu is grossly undervaluing its iQiyi online video service as it prepares to sell the unit to a group led by company chief Robin Li. At the same time, the earlier gambling site scandal is taking a new twist, with the Internet regulator reportedly opening an investigation into the matter. Read Full Post…
Bottom line: Baidu’s Robin Li could announce a deal later this week to buy 40 percent of soccer club AC Milan, while his company’s pursuit of Paramount was likely killed by internal fighting at the Hollywood studio.
Paramount spurns Baidu, Wanda
Internet search leader Baidu (Nasdaq: BIDU) is in a couple of major entertainment headlines as the new week begins, led by word that it could finally announce a highly anticipated deal that would see it buy a major stake of European football club AC Milan. At the same time, separate new reports are saying that the company was rejected in a recent bid for a strategic stake in Hollywood giant Paramount, the studio arm of Viacom (NYSE: VIAb). Those same reports are saying Wanda Group, another Chinese entertainment aspirant, was also rejected in pursuit of a similar deal. Read Full Post…
Bottom line: A rumored Chinese purchase of 80 percent of AC Milan, together with a new Chinese soccer buy in Australia and NBA purchase in the US, show a recent Chinese buying spree of western sports teams continues to gain momentum.
China in 3 new foreign sports team investments
China’s roll into western sports teams continues, led by word that a Chinese group including Baidu’s (Nasdaq: BIDU) chief Robin Li is on the cusp of a deal to buy 80 percent of soccer club AC Milan for 750 million euros. But that group isn’t the only one making soccer headlines, as a Shenzhen businessman has also reportedly bought Australia’s Newcastle United Jets club. And my prediction that someone in China would make a bid for an NBA club in the US is also in the news, with word that a businessman from southern Fujian province has purchased a small stake in the Minnesota Timberwolves. Read Full Post…
Bottom line: New revelations about Baidu’s fees for endorsing certain companies and including them in special zones on its website are the result of a business dispute and are unlikely to attract major attention from China’s Internet regulators.
Sofang protests Baidu fees
Just as Baidu (Nasdaq: BIDU) starts to recover from a major scandal involving misleading online search results, the Internet giant is coming under attack for similar tactics from a major online real estate services firm called Sofang.com. In this case Sofang’s move looks somewhat opportunistic, taking advantage of the earlier recent scandal to draw attention to another one of Baidu’s less-than-transparent practices involving fees for special treatment on its various websites. Read Full Post…
Bottom line: Baidu’s new policy of greater transparency in its search results is long overdue, and is unlikely to have a major impact on its business due to lack of other choices for advertisers in the China search market.
Baidu cleans up search site
What a difference a week makes. After coming under unprecedented assault for putting profits above everything else, leading search engine Baidu (Nasdaq: BIDU) has just done a major overhaul of its core search service to make it more transparent and useful. The overhaul was long overdue but was hardly voluntary, and only came after the company faced the biggest crisis since its founding in 2000.
It’s somewhat ironic that this particular crisis took so long to come, since the kinds of misleading practices at the center of the controversy are widely known and central to Baidu’s huge profitability. Those practices include selling preferred positions on search results pages to advertisers who pay the highest prices, even though that fact was never clearly conveyed to Internet users. Read Full Post…
Bottom line: Baidu’s spin-off of its professional video service continues its plan to separate newer loss-making units from its core search business, and could fuel strong profit acceleration for the New York-listed company by year end.
Baidu break-up continues with video unit spin-off
The slow motion break-up of online search leader Baidu (Nasdaq: BIDU) marches on, with word that the company is spinning off its professional video service into a separate company. The move will see the service, Baidu Video, receive 1 billion yuan ($150 million) in new investment as it takes on 2 more partners.
This particular move comes just a week after Baidu detailed a major corporate reorganization that was also aimed at separating out its older and highly profitable search services from its newer businesses, most of those losing big money. (previous post) As a relatively neutral observer, I have to say this particular strategy looks smart as it will help investors see more clearly how Baidu’s different businesses are doing and invest in ones where they see the best potential. Read Full Post…
Bottom line: Pony Ma’s big charitable donation reflects some restlessness with his Tencent empire, while Robin Li’s potential pursuit of the AC Milan soccer club reflects a recent interest by Chinese billionaires in sports club ownership.
Robin Li chasing AC Milan?
Two of China’s richest Internet entrepreneurs are in the headlines today for their personal spending, led by a huge gift from Tencent (HKEx: 700) chief Pony Ma as he follows many of his western peers into philanthropy. Meantime, Baidu (Nasdaq: BIDU) chief Robin Li may also be following several of his Chinese peers into the realm of sports team ownership, with word that he may be one of the leaders of a group aiming to buy Italian soccer club AC Milan.
Neither of these stories will have much impact on Tencent or Baidu, since both involve each companies’ founder engaging in personal interests. But they do provide some insight into the personalities of these multi-billionaires, who still make most or all of the major decisions about their companies. Read Full Post…
Bottom line: Guo Guangchang’s appearance at this year’s meeting of China’s legislature is a positive signal for Fosun investors, designed to ease their concerns that he might be in danger of arrest as part of an anti-corruption probe.
Fosun chief Guo attends annual Beijing political pow-wow
Local media are buzzing today with the latest thoughts from some of China’s biggest corporate leaders, many of whom are attending a big meeting in Beijing connected to the annual meeting of China’s legislature. But among all the chatter taking place on the pow-wow’s sidelines, the most interesting tidbit among companies I follow is the mere presence of Guo Guangchang, head of the massive Fosun conglomerate.
Guo’s appearance at the Chinese People’s Political Consultative Conference (CPPCC) would normally be a non-event, since he’s an official member of this group that provides advice to Chinese lawmakers. But Guo was in far more sinister headlines back in December, when he disappeared for a few days under murky circumstances and later said he was assisting in an unspecified government investigation. (previous post) Read Full Post…
Bottom line: Tencent’s sharp focus, strong management and savvy strategic tie-ups make it China’s best Internet investment for the long term, though its shares may feel some short-term pressure due to high valuation.
Tencent builds empire on SNS
This week the series on my favorite Chinese stocks takes us to the “Big 3” of Baidu (Nasdaq: BIDU), Alibaba(NYSE: BABA) and Tencent(HKEx: 700) , sometimes called the BAT super trio because they’re the country’s biggest Internet companies by quite a large margin. I’ll end the suspense right away by saying my favorite among these 3 is Tencent, the only one that’s listed in Hong Kong.
I’ll look briefly soon at some financials comparing this trio, but will openly admit my Tencent attraction is less based on market fundamentals and instead is tied to its corporate personality that differs quite a bit from the others. These “personalities” are a direct reflection of each company’s founder, since all 3 are relatively young and the founder of each is still quite clearly in charge. Read Full Post…
Bottom line: Baidu’s sale of its Qiyi video unit is a first step before a domestic IPO, and the valuation from that sale shows that Alibaba is overpaying for rival video site Youku Tudou and that industry leader LeTV is still highly overvalued.
Baidu sells Qiyi video unit in run-up to IPO
Two of China’s largest online video sites are in the headlines as the nation returns to work after the week-long Lunar New Year holiday, led by word that Baidu (Nasdaq: BIDU) is selling its controlling stake of its iQiyi online video unit. In this case the move looks like preparation for a domestic IPO by the unit, since the buyer of the stake is a group led by Baidu founder Robin Li and iQiyi chief Gong Yu.
The second report has Youku Tudou (NYSE: YOKU) announcing a date for its shareholders to vote on an offer to sell the company to e-commerce leader Alibaba (NYSE: BABA). The meeting will take place on March 14, and will mark a final step before Youku Tudou ceases its brief but stormy life as a publicly traded company and becomes part of Alibaba. Read Full Post…
