Wednesday, March 14, 2007

Calls of Note Part 3

- Citigroup has some interesting, yet concering comments on (NASDAQ:BIDU) after completing a paid search survey. The takeaways include:

Concerns on Baidu's growth rate reinforced. 1) Baidu likely seeing higher churn, with 15 advertisers planning to cut spend in next 6 months for every 20 planning to increase. 2) Google can't be counted out: advertisers give it higher satisfaction and spend more on Google on average than Baidu.

Advertiser breakdown suggests Baidu's lead over Google less than traffic lead. Of the respondents, 86.3% advertise on Baidu and 62.2% on Google (respondents advertise on more than one engine). This contrasts with the traffic share numbers from Sept, where Baidu had 61.9% share vs. 24.1% for Google.

Google looks set to gain from ad budgets in the next six months: more advertisers plan to increase their spend (~25%) plus fewer plan to decrease their spend (only ~5%) on Google, compared to Baidu, where ~20% plan to increase spend, but 15% plan to decrease spend.

Maintains Sell on BIDU.

Notablecalls: This may be the reason why BIDU was so weak yesterday. On the other hand, I've never really seen anything leak out of Citi before. Would not be surprised to see some initial weakness in BIDU following these comments.


Patrick said...

while i do not disagree with your sell call on BIDU, you should know that Citi was out negative on BIDU since the earnings call fact, i believe they dngraded the stock. there was no leak...Citi had already been cautious.

notablecalls said...


You're right, Citi has been negative on BIDU for some time already. I haven't highlighted any of Citi's calls on BIDU as they didn't usually include anything really insightful. This of course changed today.


stockmaven said...

Would note, that NC didn't really initiate a "Sell Call" on BIDU, all you did was point out Citi's comments & add a comment that there "might" be some early weakness in the name --- Great Site, Keep up the good work