Baidu's mobile platform provides an upside
The company's Yi platform could be instrumental in maintaining its dominant search market share in China.
Stopping this advance could be Google (GOOG), which is looking to reboot its relations in China after making its much publicized exit from Chinese soil. This could be especially important for Google given the explosion of Android-powered devices that use Google as the default search option.
Baidu Yi could be big in 2012
The Dell Streak Pro D43 might not have a material impact on Baidu's Q4 2011 results, but Baidu's Yi platform could be instrumental in maintaining the company's dominant search market share in China, which stood at over 80% in November 2011. If the Android market opens up again in China, the Yi could be a differentiating factor in the Chinese mobile OS market, providing a mobile platform specially catered to language specifications within the country. This could provide an upside to Baidu's search market share.
Besides, now that U.S. regulators have eased their stand on Baidu after removing it from the "notorious markets" piracy following a settlement between Baidu and major record labels like Sony, Warner Music and Universal for alleged copyright infringement, this should make it easier for Baidu to expand its international footprint.
The company's Chinese operations contributed over 99.8% of its total revenues in 2010, and this would reduce over time. However, the reduction would be very slight at best since Baidu's businesses are still highly China-centric, and it needs to significantly adapt to international standards to have tangible revenues outside China.
We have a revised price estimate of around $140 for Baidu's stock, which is roughly 10% above the current market price.
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The company is scrambling to protect its equities arm, which could face declining volume and revenue as competitors close the gap.
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