July 17, 2012
Senior technology analyst Eric Bleeker reveals to you why he recently bought Chinese search-engine company Baidu. While Baidu always seems expensive, its recent plunge off its 52-week highs makes now a great time to invest. Last quarter's revenue growth slowed to a still-remarkable 75%, revealing the strength of Baidu's brand even as China's economy slows. Middle-class citizens of China are far more accustomed to making purchases on the Internet, a trend Baidu is poised to profit from.
Not only that, but there's still a large headway for growth in total users. As Eric sees it, compared with Russian search provider Yandex, Baidu has greater opportunities for growth and higher market share, yet the two trade at similar valuations. With more and more people accessing the Internet on mobile devices, Baidu has moved to become the default search engine on 80% of branded Android devices in China, and it recently struck a deal with Apple to be the dominant search engine on iPhones. The opportunity looked ripe, so Eric pounced with a small position and is looking to add more if Baidu keeps dropping as he sees it as a great long-term play, even if China's economy slows down.
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