Baidu Gains from Google’s Exit from China

Posted by Admin - April 29th, 2010

A couple of months ago Google pulled out of China rather than help them censor Internet search results. When Google pulled out of China there was a widespread concern that no company would be able to replace them. However, Chinese search engine Baidu seems to think otherwise.

Baidu’s American Depositary Shares — which have already more than doubled this year on Google’s shuttering of its site — soaring 14 percent to $710 (468 pounds) in after-hours trade from its close of $621.38 in regular trading.

“It’s not going to happen overnight but over time Google’s traffic will decline gradually and over time we expect one-third of the advertising dollar to shift to Baidu,” said Elinor Leung, a CLSA analyst in Hong Kong, said citing a 2-3 year period

Baidu captured more than 64 percent of China’s search market in the first quarter, up from 58.4 in the fourth quarter, while Google’s share fell to 31 percent from 35.6 percent, according to research firm Analysys International.

It is impressive that Baidu has been able to capitalize on Google’s withdrawal so quickly. They far outpaced analysts estimates of what they would make in the first quarter.