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.
(NASDAQ:NFLX)subscribers couldn't access the DVD-rental site for a bit in 2007.
(NASDAQ:GOOG)made headlines when it went through a brief outage in 2005.
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.
Baidu and Google are Motley Fool Rule Breakers recommendations. eBay and Netflix are Motley Fool Stock Advisor picks. Motley Fool Options recommends a bull call spread on eBay. Try any of our Foolish newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz has been to China once and relishes admiring its dot-com revolution from afar. He owns shares of Netflix and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.