CBC:Chinese search engine's stock up 354%

Chinese search engine's stock up 354%
Last Updated Fri, 05 Aug 2005 17:36:27 EDT
CBC News
A tiny and fast-growing Chinese search engine company has become the hottest new issue in a long time.

Baidu.com C the word reportedly means one hundred times C began trading on the NASDAQ market Friday, with the new shares issued at $27 US each. The stock opened at $66 US and closed at $122.54, a gain of 354 per cent on the day on very heavy volume of 13.7 million shares.

[IMG]http://www.cbc.ca/gfx/pix/bizlogo_baidu.jpg[/IMG]

North American investors are enamoured of China, said Michelle Warren, an analyst with Evans Research in Toronto. "Their hopes and dreams are tied up with this company."

But she suggested investors "exercise a bit of caution."

Baidu (NASDAQ:BIDU) is being compared with Google, the U.S. search engine that went public last Aug. 19 and closed at $292.35 US, over three times the issue price of $85 US.


FROM AUG.19, 2004: Google shares open at $100 US

Baidu stock moved much faster than the much-bigger Google's did, but Baidu is just a tiny fraction of the U.S. company's size.

Baidu Q1 revenue $5.2M US

According to its prospectus, Baidu's 2004 revenue was $13.4 million US, and it made $1.5 million US profit.

In the first quarter, profit was $303,000 US on revenue of $5.2 million US.

But growth has been very fast; Baidu's revenue jumped 294 per cent in 2003, and 187 per cent in 2004.

Google (NASDAQ:GOOG) reported second quarter profit of $343 million US on record revenue of $1.38 billion US.

"We are the leading Chinese-language internet search provider," the prospectus said. "Our search engine was the most frequently used search engine in China in 2004."

Baidu.com is the second-largest website in China.

Google is among the winners, at least on paper, from Baidu's market success. Google bought nearly 750,000 shares for $6.67 US each in June 2004 when the Chinese company sold some stock privately to raise money.

Baidu was founded by Robin Yanhong Li, now CEO, and Eric Xu, who has left. Both men studied in the U.S. and formerly worked in the U.S. high-tech industry.

Baidu initially wanted to raise about $50 million US, but demand for the stock was so strong it ended up selling four million shares for a total of $109.1 million US.