Baidu (NASDAQ: BIDU), China's largest search engine, has two things going for it. The Chinese internet market is growing quickly, so is the appetite for using search sites that is growing almost everywhere. Baidu's financial results should be spectacular . . . but they aren't.
Based on the company's report of its most recent earnings, the firm posted revenue growth of "only" 58% to $132 million. But annual growth in sales last year was 83%. In the last quarter of the year, Baidu lost some customers, which it said have since returned. The company did not say, however, that those events accounted for its falling growth rate.
Baidu's numbers illustrate disturbing trends. Economic growth may be dropping faster in China than the government admits. The middle class, a big consumer of internet content, is getting smaller as factories shut down due to dropping demand for exports.
Search, in general, may be reaching a saturation point. People in China, the U.S., or almost anywhere else can only spend so much time looking for entertainment and information on the internet. When Google (NASDAQ: GOOG) posts its next set of results, its investors should hope that it is not seeing the kind of slowing sales growth rate that hit Baidu.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
2-19-2009 @ 10:40PM
staggermekc said...
Good, we don't need a super power Communist China owning our country and taking jobs and killing the planet and animals of all types.
They are better off going back to village/farming and all that other 3rd World stuff
Let them eat rice!