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

[Ames Tiedeman:]

The bubble is back

2008 Apr 25 07:44 AM

[Timothy Per...:]

"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.

2008 Apr 25 12:21 PM

[Ames Tiedeman:]

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.

2008 Apr 28 07:36 PM

[Timothy Per...:]

Baidu is growing revenue fast and the trailing price-to-sales ratio is now 31. What really matters is whether there is a large enough market for a company's products, whether the company's business model works, whether they can maintain their market share, and whether the company's management executes well and reaches its targets. I have no idea where you get the idea that 20X sales was considered high during the height of the dot-com bubble. Many companies had barely any revenue to speak of and had multi-billion dollar market caps. EBay had an extremely high valuation and it grew into it. Amazon has had a high valuation for a decade.

2008 Jul 30 12:25 AM