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By the end of the market today, Chinese Major search engine, Baidu (BIDU)closed at
$566.63,
while the world leading search engine Google (GOOG), ended up at
$565.56.
(note, Baidu has only around 34 million shares, where as Google has 317 million, so, even though Baidu single share is more expensive, Google is still worth way more than Baidu.)
Now, at prices this close, and if you were given a choice to have 1 share of either company, which one would you perfer?
Baidu or Google?
Now I do not know a lot about either company (which is bad, you don't want to make any decisions based on only commen sense and little knowledge), but since we are not pros, nor do we have the time to research like the pros, I'll just tell you my opinion anyways. XD
After the conflict with the Chinese government, Google's pretty much lost the battle against Baidu in china. With a market share before the conflict of only 17%, Google's realized that it has a relative unsuccessful campaign in China before the conflict.
With a superior language platform and deep cultural roots, a result of its Tie Bas and Q&As, I think, Baidu WILL gain a market share of at least 90% eventually and will almost eliminate Google in China.
So, Baidu's pretty much going to get at least 1.1 or 1.2 billion market share.
But what about the rest of the world populaton of around 5 billion?
Who's gonna take that?
With a deep cultural root in China and lack of development in foreign markets, it is unlikely that Baidu will change its business model and move internationally, which is focus on the 1.3 Billion Chinese people.
So, I think, the rest 2 or more billion people with computers will be Google's.
Already have above 70% market share in Canada, US, and even 90% market in England, Google's market share will be very secure internationally. When you mention India, Japan, other countries, Google's international prospects looks very promising. (again, this is just common sense, not really good understanding of google's business model)
And google's already part of most if not all North Americans' lives. I use Gmail to connect with people, I use Google Documents to compose, I use Google map to navigate, I use google Finance to look at stocks... I use google to search everything...And google owns YouTube, which I'm sure that most of you watches it at least 20 hours a day.
Google owns me.
End of arguement.
LOL
In short, on the macrocosmic level, Google has way better access to international market share that Baidu does. Even though Baidu can pretty much SECURE its 1.1 billion ish market share for sure, unless anything inhumane happens again. (eg, in 2008, Baidu advertised scams and caused people to buy fake products and got sick.)
Now let's talk statistically.
Baidu and Google both have around 25% operating margin(meaning, 100 bucks in revenue, 25 bucks will be pure income), which is very good. as normally anything above 20% is very attractive. (Our lunch boxes operating margin is 25% as well, ^_^)
but, Google's revenue is way more than Baidu's.
Baidu's Fiscal (Annual) Net income in 2009 is $1485 MILLION Chinese Yuan, which is 42.7 Yuan a share, which is $6.26 USD a share.
Google's 2009 Fiscal Net Income is $6520 USD, which is $20.4 USD a share.
theoritically, it is like 1 share of Baidu of $566 will earn $6 a year, and 1 share of Google of $565 will earn $20.4 USD a share.
Google looks better already doesnt it?
There is more.
Baidu's P/E ratio (Price over Annual Earnings, which shows how much an investor is willing to pay for the stock's earnings. A high P/E ratio means a more overvalued stock , generally anything higher than 25 is pretty overvalued by investors) is around 90.5!
While google's P/E ratio is 28!
Baidu's way more overvalued than Google.
Another way to look at this statiscally is, the market temporarily thinks that Baidu is worth 19 Billion, while Baidu only has a net worth of 697 Million USD (Assets - Liability). In other words, the market values Baidu 27 times more than what it actually worth, statistically.
Google on the other hand, is valued at 180 Billion by the market, while it has 36 Billion of net worth. which means the market values google 5 times more than what google has tangibly.
OK. We are almost there.
Let's look at China's real estate market and stock market for a seond.
China's real estate market has raised, according to a company's report, around 10%. However, this may not be the case at all. Some places, house prices rose even 80% or 100% !!
My friends' father who works in the real estate industry in China, said, 2009 July, house prices in Shen Zheng, were rising as much as $8000 RMB A DAY! that's $1000 USD a day!
Housing is rediculously priced in China.
WHY?
INFLATION!
Mass government stimulus, mass money printing, and low interest rates. (If you want to know more about this specifically why, tell me)
As a result, this implies that there is a HUGE price bubble in the housing market as well as the stock market. (Iven has warned this to me many many times)
and Iven seens china's market to crash in 2012. XP (I think it may happen even sooner now)
So, let's sum it up.
During a government stimulus plan, Baidu has doubled till now from march 2009. I mean, just look at thomas Lui's portfolio on facebook which comprises of only BIDU. He made 175% last time i saw him. which is 17.5m. That's crazy. BIDU seemed to rise endlessly.
It makes $6 on each share of $566, it has a P/E ratio of 90, and the market is paying 27 times of its tangible worth because they think "It's HOT".
Now, Google, which also doubled, but is making $20 a share of $566, with a P/E raio of 28 and a way better international development prospect, the market only values it 5 times of its tangible worth.
Statistically, compared to Baidu, Google is undervalued.
However, the US is also developing a SERIOUS bubble.
up untill now, the FED has always pumped large money, whereas China at least started to pump less.
The FED is not stop'n ! They are keeping interest rates at record low for AT LEAST 1 more month!
I am not sure if Google is really undervalued, I am not sure if google will go back to its $700 level. I don't like Google stock due to the nature of tech companies.
But there is 1 thing that I am 90% certain,
that is,
Baidu will falter.
Well, so, Thomas, you might want to sell your Bidu shares. XD.
Jason you too.
hehe.
Anyways, this is just my opinion.
I sincerely welcome oppositions!
I need to learn too. as far as I know, I am biased.. and I don't know alot about the good sides of Baidu.. so..
This is all just statistically speaking.
Well. That was nice wasting time at my 9 - 5 job, Now its 5;34, I can finally go home
See you guys!
Have fun at school.
$566.63,
while the world leading search engine Google (GOOG), ended up at
$565.56.
(note, Baidu has only around 34 million shares, where as Google has 317 million, so, even though Baidu single share is more expensive, Google is still worth way more than Baidu.)
Now, at prices this close, and if you were given a choice to have 1 share of either company, which one would you perfer?
Baidu or Google?
Now I do not know a lot about either company (which is bad, you don't want to make any decisions based on only commen sense and little knowledge), but since we are not pros, nor do we have the time to research like the pros, I'll just tell you my opinion anyways. XD
After the conflict with the Chinese government, Google's pretty much lost the battle against Baidu in china. With a market share before the conflict of only 17%, Google's realized that it has a relative unsuccessful campaign in China before the conflict.
With a superior language platform and deep cultural roots, a result of its Tie Bas and Q&As, I think, Baidu WILL gain a market share of at least 90% eventually and will almost eliminate Google in China.
So, Baidu's pretty much going to get at least 1.1 or 1.2 billion market share.
But what about the rest of the world populaton of around 5 billion?
Who's gonna take that?
With a deep cultural root in China and lack of development in foreign markets, it is unlikely that Baidu will change its business model and move internationally, which is focus on the 1.3 Billion Chinese people.
So, I think, the rest 2 or more billion people with computers will be Google's.
Already have above 70% market share in Canada, US, and even 90% market in England, Google's market share will be very secure internationally. When you mention India, Japan, other countries, Google's international prospects looks very promising. (again, this is just common sense, not really good understanding of google's business model)
And google's already part of most if not all North Americans' lives. I use Gmail to connect with people, I use Google Documents to compose, I use Google map to navigate, I use google Finance to look at stocks... I use google to search everything...And google owns YouTube, which I'm sure that most of you watches it at least 20 hours a day.
Google owns me.
End of arguement.
LOL
In short, on the macrocosmic level, Google has way better access to international market share that Baidu does. Even though Baidu can pretty much SECURE its 1.1 billion ish market share for sure, unless anything inhumane happens again. (eg, in 2008, Baidu advertised scams and caused people to buy fake products and got sick.)
Now let's talk statistically.
Baidu and Google both have around 25% operating margin(meaning, 100 bucks in revenue, 25 bucks will be pure income), which is very good. as normally anything above 20% is very attractive. (Our lunch boxes operating margin is 25% as well, ^_^)
but, Google's revenue is way more than Baidu's.
Baidu's Fiscal (Annual) Net income in 2009 is $1485 MILLION Chinese Yuan, which is 42.7 Yuan a share, which is $6.26 USD a share.
Google's 2009 Fiscal Net Income is $6520 USD, which is $20.4 USD a share.
theoritically, it is like 1 share of Baidu of $566 will earn $6 a year, and 1 share of Google of $565 will earn $20.4 USD a share.
Google looks better already doesnt it?
There is more.
Baidu's P/E ratio (Price over Annual Earnings, which shows how much an investor is willing to pay for the stock's earnings. A high P/E ratio means a more overvalued stock , generally anything higher than 25 is pretty overvalued by investors) is around 90.5!
While google's P/E ratio is 28!
Baidu's way more overvalued than Google.
Another way to look at this statiscally is, the market temporarily thinks that Baidu is worth 19 Billion, while Baidu only has a net worth of 697 Million USD (Assets - Liability). In other words, the market values Baidu 27 times more than what it actually worth, statistically.
Google on the other hand, is valued at 180 Billion by the market, while it has 36 Billion of net worth. which means the market values google 5 times more than what google has tangibly.
OK. We are almost there.
Let's look at China's real estate market and stock market for a seond.
China's real estate market has raised, according to a company's report, around 10%. However, this may not be the case at all. Some places, house prices rose even 80% or 100% !!
My friends' father who works in the real estate industry in China, said, 2009 July, house prices in Shen Zheng, were rising as much as $8000 RMB A DAY! that's $1000 USD a day!
Housing is rediculously priced in China.
WHY?
INFLATION!
Mass government stimulus, mass money printing, and low interest rates. (If you want to know more about this specifically why, tell me)
As a result, this implies that there is a HUGE price bubble in the housing market as well as the stock market. (Iven has warned this to me many many times)
and Iven seens china's market to crash in 2012. XP (I think it may happen even sooner now)
So, let's sum it up.
During a government stimulus plan, Baidu has doubled till now from march 2009. I mean, just look at thomas Lui's portfolio on facebook which comprises of only BIDU. He made 175% last time i saw him. which is 17.5m. That's crazy. BIDU seemed to rise endlessly.
It makes $6 on each share of $566, it has a P/E ratio of 90, and the market is paying 27 times of its tangible worth because they think "It's HOT".
Now, Google, which also doubled, but is making $20 a share of $566, with a P/E raio of 28 and a way better international development prospect, the market only values it 5 times of its tangible worth.
Statistically, compared to Baidu, Google is undervalued.
However, the US is also developing a SERIOUS bubble.
up untill now, the FED has always pumped large money, whereas China at least started to pump less.
The FED is not stop'n ! They are keeping interest rates at record low for AT LEAST 1 more month!
I am not sure if Google is really undervalued, I am not sure if google will go back to its $700 level. I don't like Google stock due to the nature of tech companies.
But there is 1 thing that I am 90% certain,
that is,
Baidu will falter.
Well, so, Thomas, you might want to sell your Bidu shares. XD.
Jason you too.
hehe.
Anyways, this is just my opinion.
I sincerely welcome oppositions!
I need to learn too. as far as I know, I am biased.. and I don't know alot about the good sides of Baidu.. so..
This is all just statistically speaking.
Well. That was nice wasting time at my 9 - 5 job, Now its 5;34, I can finally go home
See you guys!
Have fun at school.
