Baidu's Shares Soar as Google Gets Stuck in Chinese Red Tape

The name of Chinese-language Internet search engine Baidu (BIDU) means "100-times," and the company is living up to it, turning in a 137% stock increase for the year. It's trading at its 52-week high, mainly on reports that the Chinese economy doesn't look as dour as first reported, and thanks to problems rival Google (GOOG) is having in that nation's lucrative market. For the month of July, Baidu stock shot up 25%.

Beijing-based Baidu, called the Google of China, provides 70% of local searches in the most populous country in the world. China's 384 million Internet users spend an average of 2.7 hours a day online, which translates to 1 billion online hours a day. That's double the amount of online hours per day clocked by U.S. Internet users.

Baidu's stock began trading on the Nasdaq in 2005, and shot up 354% on its first day of trading, but in the past three years, the company's stock price has settled down. Over the last year, its stock price has hovered between $32 and $80 a share. The company initiated at 10-to-1 stock split in May.

On Tuesday, Baidu's stock was trading up slightly at its 52-week high of $85 a share. Last month the company turned in solid second-quarter results ahead of forecasts, with revenue totaling $282.3 million compared with $160.7 million a year ago.

Google's Troubles Are Baidu's Luck

Censorship issues have been thwarting Mountain View, Calif.-based Google's efforts to make deeper inroads in the Chinese market. The Beijing government last month renewed Google's license, but some Communist Party officials upset about that renewal still might move to bar the search provider from the country.

Although not clear if it was related to the conflict between the company and the Chinese government, the search page of Google's Hong Kong site was not accessible from the mainland on Tuesday. A Google Q&A page for Chinese users launched late last month was also down.

"Baidu continues to outperform across the board driven by a strong search advertising market in China, the launch of its (new advertising) platform and share gains from Google China," said Kaufman Brothers analyst Mayuresh Masurekar.

Baidu was co-founded in 2000 by its Chairman and CEO Robin Li, who holds more than 15% of the company's stock.