Baidu.com, Inc. (ADR)(NASDAQ:BIDU), which runs China's largest search engine, has been having a rocky time at the stock markets as competition seriously threatens to erode its well-entrenched base.
The shares in the company have been on a losing spree. They have fallen to a 52-week low having depreciated more than 24 percent in the past one year compared to U.S.-listed Google Inc(NASDAQ:GOOG) whose shares have risen 30 percent.
Baidu is still at the top of the heap having about 80 percent of the search market in China. It also has the advantage of being protected by the Chinese government which has obstructed Google in its efforts to penetrate the market.
Sales and profit growth of the company are still impressive. Baidu's revenues rose 60 percent in the second quarter to $859 million while operating profits rose 52 percent to $443 million.
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Baidu's shares in New York were trading down 2.4 percent at $107.20, compared to its 52-week high of $154.15. In the last one year it has substantially underperformed the benchmark S&P 500.
And Baidu said it plans to diversify into other markets. Japan was supposed to the first of these, but so far there is little evidence of success there. Baidu does not have the capital to make necessary investments to expand beyond China.
Competition like Qihoo 360 Technology Co Ltd(NYSE:QIHU), which launched its search engine in China in August have made significant inroads into Baidu's territory.
Youku Tudou Inc (ADR)(NYSE:YOKU) shares soared 4.76% as analyst at Citi started coverage on the stock with a buy rating. he firm said Youku has strengthened to its top position in video content and user traffic through its merger with Tudou, and that in China, the Internet has become the most important media platform.