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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: David Bogdanoff who wrote (50294)	7/2/2009 11:28:44 AM
From: Bill Harmond	Read Replies (1) \| Respond to of 57684

Deutsche Bank today on Baidu BIDU (Alan Hellawell) Rolling into another high growth year Our recent discussions with mgmt lead us to believe that 2Q rev growth is above/in-line with 33-37% guidance, despite recent labor issues. Baidu is well positioned to capture secular growth as its initiatives to improve service quality (Aladdin) and monetization (Phoenix Nest) receive positive initial feedback. We expect Baidu to capitalize on continuous improvement of China's Internet fundamentals given its mkt leadership, product quality and brand equity. Maintain BUY. Phoenix Nest continues to receive positive feedback since launch. We expect Phoenix Nest to replace the old bidding system in the long run. We believe the system will improve monetization by: broadening keyword coverage, improving paid click-through, and encouraging advertisers to spend more ad budget. Baidu continues to solidify its leadership, with mkt share rising from 72% of search queries in 4Q08 to 74% in 1Q09. Total search queries in China grew 50% YoY in 1Q09, reaching 44.3b. We expect growth of Internet applications will continue to propel Baidu’s high growth pace given its market dominance. Discussions around Google meanwhile suggest its market share could slip further.