Fidelity parent reports it's the largest holder of Baidu.com stock

Boston Business Journal

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FMR Corp. reported Monday it holds a 12 percent stake in Baidu.com Inc., making it the largest institutional shareholder in the Beijing Web search company that some call the Google of China.

FMR is based in Boston and is the corporate parent of Fidelity Investments.

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Baidu (Nasdaq: BIDU) held its initial public offering of American depositary shares last August, with shares rocketing from an offering price of $27 per share to $123 on the first day of trading. The issue traded at just under $60 per share Monday.  Am 9 Mai kommen Zahlen, und bis dahin werden wier mit grosser Sicherheit steigen...........Gap-closed 72-73$ CIAO

The strong performance appeared to be the result of Baidu's yearlong focus on building up its search technology to appeal to Chinese Web users, along with a highly motivated staff, Brueschke said.

"Probably for the remainder of 2006 if not longer, I expect Baidu, quarter in and quarter out, to extend its lead over the competition," Brueschke said.

Baidu's chief Chinese competitors in search are Sina.com and Sohu.com, while industry giant Google is trying to build up its position in China after a late entry.

For the second quarter, Baidu said it expects sales between 186 million yuan ($23.3 million) to 193 million yuan ($24 million).

On the U.S.-based Nasdaq Stock Market, shares jumped $13.42, or 22 percent, to $74.80 in after-hours electronic trading, having earlier closed down $2.29, or nearly 4 percent, at $61.38.

The company has a market capitalization of more than $2 billion.

BY THE NUMBERS: In May, the company said it expected second-quarter revenue to reach $23 million to $24 million, more than double its year-ago revenue.

Analysts, on average, are looking for the company to earn 18 cents per share on sales of $23.5 million, according to a Thomson Financial poll.

ANALYST TAKE: Goldman Sachs analyst Anthony Noto rates Baidu.com "Sell," though the company should report second-quarter revenue in line with his estimate of 193 million Chinese yuan renminbi, or about $24 million at the current rate.

In a July 11 note to investors, Noto added that he expects revenue to grow 42 percent from the first quarter, which assumes 13,000 new advertising customers and 22 percent increase in revenue per customer.

"Baidu likely continued to see strong organic traffic growth and may have benefited from Google.com's inaccessibility at several points during the quarter," wrote Noto.

Some analysts worry that Google and Yahoo's local efforts threaten Baidu.com's lead, but Noto wrote that international competition "could have a net benefit as it should help to accelerate the development of the industry."

Andrew Collier, an analyst for New York Global Securities, maintained his "Buy" rating for Baidu.com and issued a second-quarter revenue estimate of $24.4 million following meetings with four Chinese advertising distributors in June.

Collier wrote that distributors saw revenue growth from search ad buys. However, conflicts were brewing between Baidu.com's direct sales staff and distributors which could hurt growth in the future.

The analyst noted that he is already "hearing increasing reports of significant discounting from competing search engines, which will eventually cause more sophisticated customers to jump ship from Baidu's platform."

Baidu chose a poetic Chinese name because it wants the world to remember its heritage. As a native speaker of the Chinese language and a talented engineer, Baidu focuses on what it knows best - Chinese language search. Applying avant-garde technology to the world's most ancient and complex language is as challenging as it is exciting. At least people here at Baidu think so. As having diligently disclosed in the Prospectus of our recent Initial Public Offering, we believe there are at least 38 ways of saying "I" in Chinese. It is important that we master all the ways of addressing oneself in Chinese because our users depend on us to address every one of their daily queries. And trust us, pin pointing queries in the Chinese language is an art rather than a science.

Our mission is to provide the best way for people to find information. To do this we listen carefully to our users' needs and wants. Have we collected all the Chinese web pages they want to see? Are the pages current and up to date? Are the search results closely related to their queries? Did we return those search results instantly? To improve user experience, we constantly make improvements to our products and services. For example, we introduced "phonetic" or "pin-yin" search which allows our users to type in Chinese keywords using English alphabets. This feature is designed to skip the switching from English inputting to Chinese inputting and for when the user is not sure of the written form of a keyword. Our users definitely notice the many little things that we do differently to ensure a simple and reliable search experience every time.

In addition to serving individual users, we also serve as a media platform for online marketing customers. We not only provide our customers easy access to one of the largest online audiences in China but also targeted groups with defined interests as indicated by queries. Unlike traditional online advertising services which charge by flat fee, our marketing products and services are performance based. Our Pay for Performance model has taken the market by storm because it is cost effective and measurable.

We know that a lot of interesting things are going on in the Internet space, but we don't want to lose focus. China's Internet search industry is only a newly discovered territory. We see vast untapped grounds in our home base and we believe there are still plenty of prizes to be claimed by the best players.