| Tue, May 19, 2009 |
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Analyst: Baidu Won’t Take Long-Term Hit From Strike
A two-week strike by Baidu’s salesforce that has yet to be fully resolved won’t be a big drag on the company, according to Goldman Sachs analyst James Mitchell. In a note to investors, Mitchell says that even if some salespeople wind up leaving over the pay cuts—which is what sparked the strike earlier this month—the search engine won’t be seriously impacted.
He says that Baidu’s salesforce has grown to be very large (around 3,900), thanks to acquisitions, and could use some pruning anyway. Since 2005 the company has reduced sales and marketing expense as a percentage of revenue from 24 percent to 13 percent, and Mitchell expects more cuts to come—down to 9 percent by 2012.
Over time, he says, the sales process at Baidu (NSDQ: BIDU) will become more automated, like paid-search companies in more-developed countries, which would also decrease headcount anyway. Workers at Baidu halted their strike earlier this week while they await a formal response from the company.
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paidContent.org
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Analyst: Baidu Won’t Take Long-Term Hit From Strike
A two-week strike by Baidu’s salesforce that has yet to be fully resolved won’t be a big drag on the company, according to Goldman Sachs analyst James Mitchell. In a note to investors, Mitchell says that even if some salespeople wind up leaving over the pay cuts—which is what sparked the strike earlier this month—the search engine won’t be seriously impacted.
He says that Baidu’s salesforce has grown to be very large (around 3,900), thanks to acquisitions, and could use some pruning anyway. Since 2005 the company has reduced sales and marketing expense as a percentage of revenue from 24 percent to 13 percent, and Mitchell expects more cuts to come—down to 9 percent by 2012.
Over time, he says, the sales process at Baidu (NSDQ: BIDU) will become more automated, like paid-search companies in more-developed countries, which would also decrease headcount anyway. Workers at Baidu halted their strike earlier this week while they await a formal response from the company.
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| Mon, May 18, 2009 |
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Workers At Baidu Call Halt To Strike—For Now
Workers at the Chinese search engine Baidu have halted a two-week strike over pay cuts to give the company several days to prepare a response. But the two sides have yet to reach a new agreement, and the workers could choose to begin striking again.
It’s unclear what kind of financial impact the strike, which began May 4, has had on Baidu (NSDQ: BIDU). The company reported a strong first quarter just a few weeks ago and said revenue would likely grow by 30-some percent in the second quarter. During the strike, the workers either stayed home or went to the office and refused to work, the Wall Street Journal reported. Baidu is the Google (NSDQ: GOOG) of China, but unlike its U.S. counterpart, it relies mostly on human beings to sells the ads rather than automation.
Strikes over wages are rare at internet companies and work stoppages in general are scarce in China. The Baidu workers had been striking over what they said were unrealistic increases in sales quotas (where many make the majority of their compensation through commissions) and 30 percent decreases in salary. Some claim the changes were made to force them out of their jobs instead of laying them off. The company countered that the changes were made to motivate and incentivize the salesforce during what is proving to be a weak ad environment in China.
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paidContent.org
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Workers At Baidu Call Halt To Strike—For Now
Workers at the Chinese search engine Baidu have halted a two-week strike over pay cuts to give the company several days to prepare a response. But the two sides have yet to reach a new agreement, and the workers could choose to begin striking again.
It’s unclear what kind of financial impact the strike, which began May 4, has had on Baidu (NSDQ: BIDU). The company reported a strong first quarter just a few weeks ago and said revenue would likely grow by 30-some percent in the second quarter. During the strike, the workers either stayed home or went to the office and refused to work, the Wall Street Journal reported. Baidu is the Google (NSDQ: GOOG) of China, but unlike its U.S. counterpart, it relies mostly on human beings to sells the ads rather than automation.
Strikes over wages are rare at internet companies and work stoppages in general are scarce in China. The Baidu workers had been striking over what they said were unrealistic increases in sales quotas (where many make the majority of their compensation through commissions) and 30 percent decreases in salary. Some claim the changes were made to force them out of their jobs instead of laying them off. The company countered that the changes were made to motivate and incentivize the salesforce during what is proving to be a weak ad environment in China.
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paidContent.org
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| Thu, Apr 30, 2009 |
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Analyst: Why Google Will Soon Steal Share From Baidu In China
In China, Baidu (NSDQ: BIDU) is the undisputed king of search, now controlling 60 percent of that market. But Credit Suisse analyst Wallace Cheung says its dominance will start to slip in the next few years, at the hands of Google (NSDQ: GOOG) and e-commerce site Taobao. In a report issued today, Cheung says Baidu’s share will drop from 59 percent in 2008 to 55 percent in 2009 and 51 percent in 2010. Meanwhile Google’s share increases from 23 percent in 2008 to 33 percent, and Taobao’s share runs from 1 percent to 11 percent.
Cheung offers a couple reasons for the changes in market share, which is after the jump.
—Google will gain share from higher growth in search traffic as it optimizes its service in China, forms partnerships, and builds its salesforce, which is largely seen as the best in the business. In addition, Google is launching search products for music, mobile, and maps this year.
—Online shopping site Taobao should gain share because Cheung points out that most Chinese don’t use search engines as their primary shopping source. In fact, 44 percent of respondents in a survey performed by Credit Suisse said they used Taobao rather than a search engine for their shopping needs. Only 22 percent said they used Baidu. Over the next few years Cheung believes this will grow as Taobao bolsters its offerings.
Baidu reported strong first-quarter results and said the second quarter would be strong too, but it’s tough to bet against Google in search. The only question seems to be whether it will be able to grow its share (at Baidu’s expense) as quickly as Cheung predicts.
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