Tag Archives: bidu

Baidu Spending In Its ‘Online-To-Offline’ Push Will Be Focus In Q4

When Baidu ( BIDU ) reports Q4 earnings after the close on Tuesday, investors will get another look at how the aggressive online-to-offline e-commerce push of China’s largest search company is faring. In June 2015, Baidu announced that it would invest $3.2 billion over the next three years to bolster its lineup of O2O by fortifying group-buying website Nuomi, which Baidu acquired for $160 million in 2014. Baidu has said its big spending effort will pay off because its vast abilities in search will eventually translate to revenue from business commissions. The O2O business model aims to attract customers online, then direct them offline to physical stores and to services including health care and food delivery. “Ultimately, what Baidu is building and offering is much broader than a daily-deals business,” Baidu CEO Robin Li told analysts during a conference call after the company posted Q3 earnings in October. “We are creating an online-marketing and transaction-services platform, bringing to bear the power of our entire platform across search, maps, Nuomi, Takeout Delivery and Baidu Wallet. Our platform benefits from shared synergies, with traffic and data from search and maps enhancing the growth of our newer products.” Banking On O2O To Compete Baidu is banking on its O2O business to help it compete in China’s burgeoning e-commerce arena vs. China e-commerce leader Alibaba Group ( BABA ) and others. But Alibaba, too, has invested heavily to develop its online-to-offline retail capability. Other major China Web companies fortifying their O2O offerings include JD.com ( JD ) and Tencent Holdings ( TCEHY ). Analysts also want to find out how Baidu’s efforts to penetrate into the lucrative market of mobile apps are coming along. Baidu has been slow to advance into mobile apps, while China tech heavyweight Tencent has emerged as the top rival to Baidu in mobile search, according to a report on Jan. 22 from Nomura, which handed Baidu a price target cut and rating downgrade. ‘The Potential Threat’ “Who is the potential threat for Baidu on mobile? We believe it’s Tencent, rather than any of the existing search engines,” wrote Nomura analyst Jialong Shi in that industry note. “Baidu is trying to penetrate into mobile apps, but so far progress has been slow. Based on our checks with industry experts, the challenges for in-app search mainly lie in two aspects — immature technology and reluctance of app developers.” Nomura lowered its price target on Baidu stock to 180 from 200 and cut its rating on Baidu stock to neutral from buy. For Q4, Baidu has guided revenue of between $2.864 billion and $2.95 billion, up between 29.5% and 33.4% year over year in local currency, to between 18.2 billion and 18.75 billion Chinese renminbi. Analysts polled by Thomson Reuters are expecting Baidu to report Q4 revenue of RMB 18.59 billion, up 32% year over year in local currency, with Q4 EPS (GAAP) of RMB 6.60, down 26% year over year. For Q1, analysts polled by Thomson Reuters are expecting Baidu to report revenue of RMB 16.47 billion, up 29% year over year in local currency, with Q1 EPS (GAAP) of RMB 5.48, down 18% year over year. Internet Finance Initiatives Credit Suisse analyst Dick Wei boosted Baidu’s price target to 251 from 210 in mid-December, pointing to positive “traction” in both Baidu Nuomi and the company’s iQiyi video wing. Wei said iQiyi went from 5 million paid users in June to 10 million paid users on Dec. 1, while Baidu Nuomi had attained 11.2% of the online movie-ticket-booking sector. The company’s new Internet finance initiatives are also growing, Wei said. In November, Baidu announced its partnership with China Citic Bank to establish a direct sales bank, Wei said, while by the end of September, the number of registered users for Baidu Wallet reached 45 million, a 520% increase year over year. “We are positive on Baidu’s continued investment in this space,” he said. Baidu stock closed at 145.34 on Friday, down 4.8%. Instability in the Chinese stock markets and investor concern about the company’s O2O spending have helped drag down the price of Baidu stock 33% since this time last year.      

Tesla Stock Continues To Lose Spark, Tumbles To 2-Year Low

Loading the player… Electric-car maker Tesla Motors ( TSLA ) was once a high-flying stock, but after months of moving more or less sideways, the stock has now punctured its lowest level in two years. The downturn comes as analysts raise concerns over deliveries and demand, with Pacific Crest downgrading the stock to sell on Wednesday. And on Tuesday Morgan Stanley, which had been very bullish on Tesla in the past, slashed its price target to 333 from 450. Shares plunged 5.1% in heavy volume, hitting their lowest level since February 2014. Shares are now trading about 40% below their July high, reached as the stock failed to break out of a base. Tesla stands apart from other car manufacturers as a luxury electric-car maker, but it has also been at the forefront of the implementation of self-driving technology. Others are in pursuit, including Mobileye ( MBLY ), Alphabet ( GOOGL )-owned Google, Baidu ( BIDU ) and potentially Apple ( AAPL ). Mobileye is trading 60% below its high reached in August. Shares have been seeing heavy volume on many down days. Alphabet dropped 4%, sinking below the key 50-day line in quick turnover and erasing much of its gains from the past four sessions. Alphabet had hit a record high Tuesday intraday. Baidu is trading over 30% below its 52-week high. Shares have been trending lower since November. Apple has also been trending lower for the past several months and is 28% below its April peak. But shares are up today, pushing Apple’s market cap back above Alphabet’s once again after the Google parent grabbed that crown on Tuesday. Tesla reports quarterly earnings in one week.

Amazon Bookstore Buzz Signals Alibaba-Style O2O Push

Amazon.com ( AMZN ) will open 300-400 bookstores in the coming years, according to Sandeep Mathrani, CEO of mall operator  General Growth Properties ( GGP ) in an earnings call late Tuesday. While that may seem an odd choice for the e-commerce giant, which that has driven brick-and-mortar bookstores out of business, Amazon could be taking a page from Alibaba ( BABA ) and fellow Chinese Internet giants Baidu ( BIDU ) and JD.com ( JD ) as they invest heavily in online-to-offline channels. Amazon opened its first bookstore in Seattle last November. It also has permanent kiosks in many Westfield malls. The Seattle location promotes Amazon tech products, such as Kindle tablets and Fire TV streaming devices. A big bookstore-and-gadget store push would suggest that Amazon, which has long benefited from shoppers checking out goods at Barnes & Noble ( BKS ), Best Buy ( BBY ) or other locations before making purchases at Amazon, wants to become its own showroom. But Amazon likely sees the stores as being more than a showroom. While Amazon has made a huge push to ship faster — offering 1-hour deliveries in about 20 cities —  the company still would like to be faster. The bookstores would let people make instant purchases, or pick up online buys. They also could serve as mini-distribution centers. Alibaba Leads China O2O Rush Online-to-offline, or O2O, retailing, already is a huge trend in China. Alibaba spent $4.6 billion last August for 20% of Suning, a major Chinese consumer electronics chain. Of the four largest Internet companies in China, Alibaba has been investing the most money in growth. The No. 1 provider of e-commerce services in China, Alibaba last year invested about $11 billion in acquisitions. This includes $4.63 billion for a 20% stake in Suning, one of the largest consumer-electronics retail chains in China. JD.com that same month invested $700 million in supermarket chain Yonghui Superstores for a 10% stake. JD.com has a strategic alliance with messaging and mobile giant Tencent ( TCEHY ), which owns a big stake in JD. Tencent and China search giant Baidu have teamed up with Dalian Wanda, a sprawling property and entertainment giant. Baidu has vowed to spend $3.2 billion on O2O over three years. These investments have curbed profit growth at Alibaba, Baidu and others. But that likely wouldn’t stop Amazon. CEO Jeff Bezos has always invested heavily to promote future growth. Q4 earnings growth failed to meet lofty Wall Street projections in large part because Amazon fulfillment costs leapt 33% to $4.55 billion. Amazon stock fell nearly 4% on the stock market Tuesday to its lowest close since Oct. 14, part of a 13% 3-day tumble since its Q4 earnings shortfall Thursday night. Amazon fell 3.3% Wednesday morning, undercutting its 200-day moving average for the first  time in a year. Alibaba fell 4.6% intraday after losing 2.9% on Tuesday. Baidu lost 2% following Tuesday’s 3.9% retreat.  JD.com sank 4% after Tuesday’s 3.6% fall. Tencent gave up 2.9% intraday after a 2% slide Tuesday.