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"Mobile monetization is distant, macro conditions do not warrant aggressive pricing inflation,...

"Mobile monetization is distant, macro conditions do not warrant aggressive pricing inflation, and online video is competitive," writes Goldman on Baidu (BIDU -7.9%), following its Q1 miss. The firm thinks surging SG&A and traffic acquisition costs will lead op. margin to fall to 39% in 2013 from 50.5% in 2012. Brean (downgrading to Hold) and Barclays also aren't confident about near-term mobile monetization. On the earnings call, CEO Robin Li admitted mobile ad prices, though "growing nicely," remain below PC prices. Rival Qihoo (QIHU -0.3%), which may have contributed to Baidu's 6.5% Q/Q drop in revenue per ad customer, was nearly unchanged.

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Comments (3)
  • Stone Fox Capital
    , contributor
    Comments (6831) | Send Message
     
    Reminds me of GOOG and FB last year... mobile monetization is an issue until consumers and businesses figure it out, than its additional traffic.

     

    BIDU is investing for the future. The company could report substantial earnings growth if it wanted to but the internet in China id still developing.
    26 Apr 2013, 05:54 PM Reply Like
  • PeterPatersonSenior
    , contributor
    Comments (194) | Send Message
     
    Stone Fox Capital, I am with you on this one. I believe a paradox developed in BIDU stock already: the PE is way low, taking the growth rate into account. Last two years it was all worries from analysts that the growth cannot be sustained, for one reason or another. True, the net earnings "growth" slowed down, and revenue continued nicely up. And either number was continuously respectable all that time, while stock price was dropping. I think the drop was in order till last summer, but now it is past any valuation inflection point. Soon there will be a super profitable company with revenue growth 30% yearly and PE 12? Investors will wake up then, won't they?

     

    This is where I would follow up with your points, but you have written it more succinctly than I ever could.
    26 Apr 2013, 09:16 PM Reply Like
  • xdd
    , contributor
    Comment (1) | Send Message
     
    more pressure will face in the future
    27 Apr 2013, 09:13 AM Reply Like
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