After watching Sohu.com (Nasdaq: SOHU ) deliver disappointing guidance yesterday, investors in Chinese Internet stocks may be worrying about the sector in general.
What if China's other dot-coms offer equally bleak outlooks? The first quarter has been a seasonally soft time for Chinese Internet companies, but Sohu's guidance called for a sharper sequential dip than what the online portal typically experiences.
Maybe things could have been different had Baidu (Nasdaq: BIDU ) already delivered its quarterly results. Sohu's outlook would still have been gloomy, but a more robust perspective out of China's leading search engine would have outweighed smaller Sohu's guidance.
Baidu is making investors wait this time around. It doesn't report its quarterly results until a week from Thursday.
The Feb. 16 report date isn't unusual. Baidu did report its prior year's fourth-quarter results at the end of January, leading many to assume that it would have reported its financials last week ahead of Sohu. However, it has been mid-February for Baidu's calls every year before that.
The market isn't holding Sohu's performance against Baidu.
"That's the only Chinese stock that I like," Jim Cramer told viewers of last night's Mad Money when asked about Baidu.
Analysts are upbeat about Baidu. They see revenue and earnings climbing 88% and 82%, respectively. Sohu's report will place a greater emphasis on what Baidu has to say about 2012, but -- as we've seen in the U.S. -- paid search and display advertising are two entirely different markets.
SINA (Nasdaq: SINA ) may have a little more to worry about since it shares Sohu's emphasis on brand advertising. However, the success of SINA's Weibo offers a different growth dynamic at SINA. Perhaps more importantly, SINA has historically not reported until the first week of March. By the time SINA reports nearly a month from now, the market's already thinking about seasonal bounce for the second quarter.
Sohu's disappointing report will make next week's Baidu report more interesting, but it's Baidu that will ultimately be the niche's bellwether.
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