Baidu’s Q1 Earnings: Long-Term Positive

Baidu (BIDU) just met on EPS, which is disappointing. However, both on revenue and revenue guidance they beat hands down.

In addition, Baidu is spending money on projects (such as Baidu Japan, E-commerce, social networking, wikis, radio and TV advertising, etc.) that will pay off later.

Baidu can’t maintain it’s advantage over Google (GOOG) in China by standing still. It’s pretty obvious that Baidu was trying to lower expectations with it’s press release in February (as posted by CR).

Baidu is using this year's strength to position itself better in the future and not milking it’s impressive growth for short-term gains. The best is still to come from Baidu.

Disclosure: Author has a long position in BIDU

Comments

[AmesTiedeman]

The bubble is back

[TimothyPereira]

"The bubble" in what? If you mean in tech stocks, there is very little comparison between a company trading a 1.5 times it's expected earnings growth rate and dotcoms trading based on eyeball multiples...

Having said that what really matters is whether you think the music will stop in China before Baidu grows into it's price to earnings multiple. For the time being there is no sign of this happening.

[AmesTiedeman]

The bubble in Bidu. Bidu needs to grow revenue fast to support this price. Their revenue is seriously lacking. This thing is selling for 50 x sales. 50 times! This is nuts. No stock should trade more than 10x sales. At the height of the dot com bubble 20 x was considered high.