Google and Sina to Take on Baidu

Google and SINA Corp., a leading Internet portal in China, announced a strategic partnership in the areas of online search (Google search on SINA.com), advertisement (AdSense and AdWords) and news. Financial details were not disclosed. Shares of Google lost 0.8% to $511.34 during normal trading Monday. SINA lost 1.8% to $38.43 and Baidu rose slightly (0.05%) to $137.10. A Hong Kong-based JP Morgan analyst commented, "The increased traffic and branding from the Sina-Google tie-up will make Google more localized and may help the two companies regain market share from Baidu." A Beijing-based web analytics firm estimates Baidu's search market share in China at the end of Q1 was 57% (-1% q/q), versus Google's 19% (+2% q/q). During Q1, Baidu surpassed SINA as China's leading online advertiser for the first time. Bloomberg reports Google's China chief said the firm is "looking for more partners" locally, but wouldn't elaborate. He said SINA and Google have already started the search service, are testing advertising and will likely start a news service "soon."

Sources: Press release, Bloomberg
Commentary: Sina Announces Deal With Google On Search, Ads, Content • A Closer Look at Google's Valuation • Citigroup: Google Trading At 40%-60% Discount On a PEG Basis • Search Ratings: Google Gains, MSN Slips, Yahoo Stays Same • Baidu: Beware Downside Risk
Stocks/ETFs to watch: Google Inc. (GOOG), Sina Corp. (SINA). Competitors: Baidu.com Inc. (BIDU), Yahoo! Inc. (YHOO), Microsoft Corp. (MSFT), IAC/InterActiveCorp (IACI). ETFs: iShares Goldman Sachs Technology (IGM), iShares Goldman Sachs Software (IGV), First Trust Dow Jones Internet Index (FDN), First Trust IPOX-100 Index (FPX)
Conference call transcripts: Google Q1 2007 , SINA Q1 2007, Baidu.com Q1 2007

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