The company's PC-based revenue growth continues to lose steam due to a slowing economy, growing competition on mobile and PC compounded by the growing popularity of mobile that's cannibalizing PC search queries.
On the PC search-side, aggressive new rival Qihoo ( QIHU )has become a formidable rival, and on the mobile side, a handful of private companies including Tencent have emerged as genuine threats.
Baidu was falling 7.5% to extend its 12-month decline to 36%.Echo He, an analyst at Maxim Group in New York has a "sell" rating and $75 price target on Baidu on expectations that margins will have to keep on sliding, along with the existing pressures on revenue, as the company pours resources into defending its traditional PC-based source of revenue and accelerating its market share in the increasingly dominant mobile-internet space. "Its mobile operation is growing faster, but it sounds like it will take some time to be considered significant," said He after Baidu's first-quarter earnings call last night. The multiple mobile initiatives to fortify its position in mobile may take up to two years to come to fruition. Management reiterated during the company's first-quarter call its commitment to investments in mobile R&D and marketing, cloud services and acquiring smaller companies as it strives to seek new avenues of growth in online and mobile search and online videos. They must also defend their current market share by putting more money into sales and marketing promotions. "Baidu hasn't done anything wrong," said He. "The market was just different then
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