Is Baidu Inc. Ready for a U.S. Invasion?

Baidu is raising money that it doesn't really need. Does this signal Baidu's intent to acquire abroad?

Jun 4, 2014 at 7:30PM

Tech giants flush with cash taking on debt is no longer a rare sight, so there's no point in bellyaching about Baidu (NASDAQ:BIDU) proposing to sell senior notes. Does China's leading search engine need the money? No. It has nearly $6.4 billion in cash, and that's after going on a shopping spree over the past two years to become a dominant force in everything from mobile apps to online video.

However, sometimes it doesn't hurt to rub elbows with underwriters as you raise some more money for "general corporate purposes." The move could also signal a push to increase its presence outside of China. Moody's -- in assigning a healthy A3 rating to the proposed unsecured notes and sticking to a stable ratings outlook -- seems to suggest that as a possible scenario. 

"While Baidu has sufficient cash to fund its operations and potential acquisitions, it is more tax efficient for Baidu to raise offshore funding through the notes issuance to fund offshore payments for its acquisitions," notes the Moody's report

This doesn't mean Baidu is about to start snapping up stateside dot-com darlings. We don't even know the actual amount Baidu is raising, here. However, it wouldn't be a surprise to see the company continue to diversify away from search in China.

Qihoo 360 (NYSE:QIHU) has come out of nowhere to command roughly a quarter of China's search queries. That's a pretty bold jump for a platform that didn't even exist at this time two years ago. It remains to be seen if Qihoo 360 can keep growing its share, or if it can even sustain what it has garnered once it begins to effectively monetize that traffic.

Baidu hasn't had much of a problem growing in light of Qihoo 360's presence on its turf. Revenue growth is soaring, accelerating to a 59% spurt in Baidu's first quarter. Its marketing customers are spending 44% more on Baidu than they were a year ago, so it's not as if having a pesky rival around is freezing advertisers. However, just as Baidu has diversified within China by taking a bigger role in online travel, streaming video, and mobile marketplaces, it probably doesn't hurt to have some more skin outside of the world's most populous nation.

Chinese Internet stocks often trade at a discount to their growth because the geopolitical risk is baked into the price. If Baidu can help build a global empire of online properties, it will make it that much easier to justify the stock as an investment to folks concerned about pure plays on China's Internet revolution.

So, there's no bellyaching, here -- unless Baidu simply sits on this money that it will be paying interest on for too long.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Baidu. The Motley Fool owns shares of Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers