For now I'm going to cut Baidu.com from a 2.2% stake to 0.7% and then re-assess. Most of these shares were bought at $111 so we have a decent gain in just over a week (7%). I would like to see this stock break above its 20 day moving average (low $130s) as a show of strength. If it cannot do this we will probably exit it completely and wait for a better time to have this as a position.
I will re-iterate what I said yesterday about perception versus reality. I believe perception is China is relatively immune to the global economic slowdown - I believe reality will show that to be untrue. Note Baidu's comments about machinery/franchising - that's real business on the ground in China. But perception is what drives stock prices, not reality. There has been a bit of a real estate, consumption bubble also formed in China - really no different than the US in that aspect. But they shall recover much quicker than we will. (and they don't need the kindess of strangers to do it)Baidu (BIDU) this morning said it now expects Q4 revenue of $131 million to $133 million, down from previous guidance of $151 million to $155 million. Analysts had been expecting a reduction in guidance; The Street consensus had already come down to $140.1 million. Yesterday, several analysts cut estimates on the company.
- Baidu said the economic slowdown in China is having a greater than expected impact on online marketing particularly, in machinery and franchising. Also affecting results, the company noted, was its recent removal of paid search listings from unlicensed medical and pharmaceutcal companies, following a series of negative reports on China Central Television. The company said it also removed a number of “questionable” paid search listings outside the medical sector. Baidu did say that some medical and pharmaceutical advertisers have resume paid listings after the submission of required licenses.
