Poor Baidu (NASDAQ:BIDU).
Shares of China's leading search engine took a hit today, after its flagship Baidu.com site was hacked for a period of at least four hours.
The Iranian Cyber Army, the same group that took Twitter down for a brief spell a few weeks ago, was apparently behind the hack.
Site outages tend to drive share prices lower, but I've never understood the rationale. Sure, there's a temporary hit to a site's earnings power when it's down. Baidu can't serve lucrative paid-search ads if it's not online. However, in the end, outages only prove how important a site or service is to its users.
Downtime -- either hacked, self-inflicted, or an act of nature -- is just part of the business.
- Sirius XM Radio's (NASDAQ:SIRI) XM had a "signal degradation alert" three years ago.
- Research In Motion (NASDAQ:RIMM) suffered an email outage for BlackBerry users in 2007 that lasted several hours.
- Netflix (NASDAQ:NFLX) subscribers couldn't access the DVD-rental site for a bit in 2007.
- Google (NASDAQ:GOOG) made headlines when it went through a brief outage in 2005.
I may be showing my dot-com geekness, but I vividly remember the 19-hour service outage at AOL (NYSE:AOL) in 1996 and the longer eBay (NASDAQ:EBAY) downtime three years later.
All of these companies are still in business. Outages come and go. Right now, Baidu investors may be fearing the worst: What if Baidu users had no choice but to switch to Google's Chinese search engine during the downtime? I'm sure many of them did, but they probably came right back when the site was restored. The success of other companies and sites that have suffered outages prove that online loyalty is a little stronger than one may assume when every rival is a click away.
So don't shed a tear. Baidu will be back. If it managed to bounce back from 2008's scathing expose on its advertising practices, it will come back from this.
