Baidu, Inc. (BIDU) announced that it is reviewing possible acquisitions to extend its lead in the world’s largest online market by users, according to Chief Financial Officer Jennifer Li. These acquisitions could add some uncertainty to its future, and potentially involve additional debt or equity issuance.
Baidu, Inc. [[BIDU]] announced that it is reviewing possible acquisitions to extend its lead in the world’s largest online market by users. Investors pushed shares down more than four percent in early trading amid concerns that any acquisitions would create uncertainty and could involve additional debt or equity issuance to finance.
In the long-term, many industry experts believe acquisitions would be a smart move for Baidu. Experts believe that it may look for non-search acquisitions to diversify its services, but executives say these acquisitions wouldn’t distract it from its main paid-search business. Others are speculating that it may seek acquisitions in the Japanese market where it began.
The move towards action comes at a time when Google Inc. [[GOOG]] is trying to beef up its operations in the area. The U.S. search giant recent announced partnerships with China Mobile and Alibaba in order to extend its position in the market place. However, its paid-search business still pales in comparison to Baidu’s 62.2 percent market share.
In the end, Baidu’s acquisition strategy may not be a favorite for shareholders in the short-term given the increased uncertainty and risk. However, long-term acquisition might be the best way to secure its position in the world’s largest online search market.
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