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Snow, Baidu, Chesapeake, Pilgrim’s Pride

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(Update) Felt I am like a car-thief today: had to climb from back seat to front seat, because the front doors were frozen due to snow. Don’t know how the by standers felt?

(Original) It started to snow here in St. Louis, yesterday morning I saw a little bit snow on the car, this morning I found more snow when I got up.

Saint Louis snow 2008 pic
(Full size pic here)

The trouble for Baidu appears to be mounting, as lawsuit on the Ads came in. The information on Baidu (Nasdaq: BIDU) is quite effient actually, compared to most other Chinese ADRs listed in the US. I still remember the hype around its IPO in Summer 2005, one year after Google’s highly successful IPO. As an old Chinese saying goes “higher climb, sharper drop”, or a western saying goes “quick rise, quick fall”. Same philosophy goes to my CROX stock trade last year 🙁

Pilgrim’s Pride

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Baidu: got a bit evil?

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On Nov 17, Baidu (Nasdaq: BIDU), China largest web search company got a huge blow in the market as the news of “Baidu placed “faked doctors and drug ad” broke (see BW for more details). This reminds me of the Focus Media (Naqdaq: FMCN) Spam text messaging story about 7 months ago. In both cases the news was broke in CCTV, Chinese national TV channel and a part of offical Chinese media. Some people may not know CCTV has large market share in the TV Ad market. Some people may sympathize with Baidu and call for “buy” the BIDU stock amid this temporary weakness.

Before this news about Baidu, actually there were reports that Baidu was guilty of “intensionally hiding the China San’lu milk powder scandal” during August this year (Olympics time). Luckily to them, local goverment officials did the exact same thing to keep the big party on. But this time they got caught. Some financial analysts naively think those Ad. made up a small portion of the Ad. revenue. This maybe true. But I don’t the problem is that simple.

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Weekend thoughts w/e 051008

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Baidu, Google China
Keso wrote this Chinese article a while back Who is Google China’s opponent? He is talking about the difference between Baidu (Nasdaq:BIDU) and Google, and he thinks Baidu has created a brand and a series of products, and consequently built a moat to fend off Google and other competitors.

This is confirmed by gseeker baidu from readers series: “baidu” real estate, “baidu” fashion apparel, “baidu” KTV. Don’t know how Robin Li (Baidu CEO) feels about people using his company’s name? By the way, gseeker is the best blog about Google in China, in my mind.

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Top 10 Chinese global brands

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Financial Times did a Top 10 Chinese global brands survey recently. And here are the winners. Did you notice anything interesting?

I noticed BoC, Air China, China Mobile, China Telecom, Sinopec, CCB are state owned (majority owned); while Lenovo, Tsingtao beer, Haier and Baidu are public companies. I am a little puzzeled why ICBC and PetroChina did not make it to the list; and I was NOT surprised Baidu tops Sina, Sohu and Netease.

By the way, many of the top 10 brands are Beijing Olympics sponsor, such as BoC, Air China, China Mobile and Lenovo. If you watch NBA on TV, you will see Lenovo and Haier ad. from time to time.

top 10 Chinese global brands
(Full size pic is here).

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Lessons from Longtop

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Well, Longtop did not turn out to be long top, it was a short top if you will. I sold most of the shares today (still 50 shares pending in Scottrade).

The problem with Longtop (LFT) is not fundamental, it’s rather valuation. In current market, I think an unproven Chinese financial software (IT service) company like Longtop can not sustain its bubble price at IPO.

Some lessons:

1) Be careful of IPO (maybe I got MR at pure luck, but I did not get it in the first day). Also be careful of all underwriters: from JP Morgan (NINE), WR Hambrecht (XFML, GSIT), and Goldman Sachs (LFT)…NINE and XFML are in my Hall of Shame list, will LFT join them too?

2) Again valuation. A good company does mean good stock. Look at Baidu during 2004 IPO to 2006.

3) Don’t averege down if I haven’t made any money from a stock, e.g., SBUX, LFT,…I think CROX is different because I made money on this one, and has some knowledge on it. In other words, if average down too many times, something must be wrong here.

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Focus Media FMCN is hotter than BIDU

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It seems not very intuitive that Focus Media (FMCN), a LCD media advertising company, has done better than Baidu (BIDU), the No. 1 search engine in China. After all , putting up the LCD screen, soliciting the advertising customers, and creating those short films are not high tech as “search engine”, which involves creating a large number of clustered computer, and complicated search algorithm. But this is the reality, Focus Media (FMCN), closed above $80 today amid the new offering of $500 m, the PE (ttm) is about 76, market capital 4.4 B. Since its debut in July 2005 (at 20s), it’s up about 300%.


How about Baidu (BIDU), it debuted on August 2005 at about $120, and it closed at $124.50 today. Here is the chart. The PE is about 165 and market capital 4.2 B.

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