Is "Baidu" Chinese for "Google?"

It's almost the one-year anniversary of Google's (Nasdaq: GOOG  ) IPO, and of course, there are many happy shareholders. Investors taking part in the firm's online Dutch auction snagged their shares at a mere $85 a piece.

But at $291.78 per share, even diehard Google fans are starting to wonder whether the big gains are over. What's a Google investor to do?

The next move might be Baidu, which filed to go public yesterday. The company will list on Nasdaq (Nasdaq: NDAQ  ) with the ticker symbol BIDU.

According to Baidu's prospectus, it is "the leading Chinese-language Internet search provider." In Web traffic, it ranks No. 2 in China and No. 6 in the world. Much like Google, Baidu has built its traffic mostly through word-of-mouth and the so-called Baidu Union. Over 76,000 third-party websites have posted Baidu's search box on their pages; if their users search Baidu via that box, and click on ads in the process, Baidu Union members get a piece of the resulting profits.

So far, Baidu has indexed 690 million web pages, 80 million image files, and 10 million multimedia files. The site also features news, message boards, and other content.

Because of the complexities of the Chinese language, Baidu's search technologies are quite sophisticated. The company has developed special language-processing technologies to allow for relevant search results.

Baidu's business model allows advertisers to bid on keyword-search results. It's working quite well; the company has posted solid growth. In 2004, Baidu posted revenues of $13.4 million. For the first quarter of 2005, revenues were $5.2 million.

Revenues come from advertisers, who pay Baidu for each time a user clicks one of its ads, and the company's custom marketing services (campaign development, graphic design, etc.). Baidu also relies on an extensive network of distributors through whom business customers can place ads. With broadband and credit card services still nascent in China, this network is essential to Baidu's success.

The company's growth will likely continue. Based on studies by iResearch, the number of search queries per day in China reached 188 million in 2004. The studies estimate that number will grow at a compounded annual rate of 49.8% from 2005 to 2007.

Interestingly enough, last year Google invested in Baidu, acquiring roughly 2.6% of the company's equity. Within the past few weeks, Google's CEO has visited China and met with Baidu. Of course, this resulted in speculation that Google was making a bid for the company.

So far, it looks like Baidu wants to remain independent. But expect the buzz to get louder as Baidu's initial offering approaches. The ho-hum IPO market is about to get more exciting.

We've searched out related Foolishness:

Fool contributor Tom Taulli does not own shares of any company mentioned in this article.

Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

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: 493197, ~/Articles/ArticleHandler.aspx, 10/28/2016 12:40:21 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 18,245.80 76.12 0.42%
S&P 500 2,139.86 6.82 0.32%
NASD 5,229.24 13.26 0.25%

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

10/28/2016 12:24 PM
GOOGL $833.96 Up +16.61 +2.03%
Alphabet (A shares… CAPS Rating: *****
NDAQ $64.41 Up +0.46 +0.72%
Nasdaq CAPS Rating: ****