Baidu Gets Moving in Mobile

There's a little more mobile muscle at Baidu (NASDAQ: BIDU  ) , and Wall Street seems to like the new look.

Shares of China's leading search engine opened 5% higher this morning after proposing a $1.9 billion deal for mobile apps marketplace giant 91 Wireless.

Baidu has made some pretty big deals over the past two years to grow its presence in everything from online video to travel portals, but it's never cracked open its wallet wide enough for a 10-figure transaction.

However, this acquisition will be a game changer for Baidu. At a time when Baidu stock is being dogged by pesky search rival Qihoo 360 (UNKNOWN: QIHU.DL  ) and fears that it's not doing enough as desktop usage migrates to mobile computing, 91 Wireless operates a pair of leading smartphone app distribution platforms in China. A whopping 10 billion apps have been downloaded through the 91 Wireless marketplaces.

Global leader Google (NASDAQ: GOOGL  ) is living proof that investors gravitate to dot-com giants that are growing in mobile. Google hit another all-time high this week, even though its market share when it comes to search in its home market is a lot lower than Baidu's roughly 70% chunk of the Chinese market. Baidu is also growing at a healthier organic clip than Google, but investors have flocked to Google because Android makes it a juggernaut when it comes to mobile.

The 91 Wireless deal won't move the needle in the near term, financially. Baidu is probably overpaying for the deal. Then again, it doesn't have much of a choice. Qihoo 360 may only be commanding 15% of the search market, but the prevailing fear is that Baidu will continue to lose market share to Qihoo 360. It needs to be about more than just desktop search, and that's why we've seen the mad scramble for dynamic online properties at Baidu.

Baidu's good for the money. It has a net cash position of $3.5 billion as of its most recent quarter, and this probably won't be the last of its acquisitions in this recent shopping spree.

Baidu's getting moving in mobile, and that's enough to finally find its stock trading higher year-to-date after a rough start to 2013.

A fresh idea for 2013
The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 21, 2013, at 12:46 AM, NathanSmith wrote:

    It is no surprise that investors are flocking to IT companies. That industry generally has a smooth business model that allows for more profit margins with the generally accepted premise of lower risks. As for Google, I would say watch out for Bing and Yahoo. They seem to be on the rise according to some news reports.

    Another strong market is the precious metals and gold-backed IRA investments (see Precious metals prices have skyrocketed and are holding strong. Definitely worth a look also.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2540158, ~/Articles/ArticleHandler.aspx, 9/26/2016 5:23:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:00 PM
BIDU $188.86 Down -2.86 -1.49%
Baidu CAPS Rating: *****
GOOGL $802.65 Down -12.31 -1.51%
Alphabet (A shares… CAPS Rating: *****
QIHU.DL $0.00 Down +0.00 +0.00%
Qihoo 360 Technolo… CAPS Rating: **