Is Baidu.com, Inc. (ADR) (BIDU) a Buy at These Levels?

To take that opportunity, Baidu has recently agreed to acquire 91 Wireless Websoft, China’s second-largest mobile-app distributor, for as much as $1.9 billion. With the acquisition, Baidu has around 15.6% market share in China’s app-distribution market, directly competing with the largest player Qihoo, which owns around 27.4% of the market. With Baidu’s entrance, Qihoo will face great competition from Baidu in the mobile-app market, which could threaten its current market-leading position.

Valuation-wise, Google is still the cheapest valued among the three tech companies. At $885.30 per share, it is worth $294.9 billion in market cap. The market values Google at 14.8 times its trailing EBITDA (earnings before interest, taxes, depreciation and amortization). Baidu has a bit higher valuation. It is trading at $127.50 per share, with the total market cap of $44.6 billion. The market values Baidu at about 17.3 times its trailing EBITDA. Qihoo is the most expensively valued of the trio. With a $7.4 billion market cap, Qihoo is valued at as much as 100 times its trailing EBITDA.

My Foolish take

Baidu, despite the aggressive competition from Qihoo and a higher valuation than Google, will still be a good long-term pick for technology investors because of its dominating, market-leading position and the recent strategic acquisition in the fast-growing mobile market in China, the largest market in the world.

Personally, I like Google the most due to its low valuation. Moreover, I think Google will deliver good returns for investors in the long run with its well-established global-leading positions in both the search and mobile markets.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Baidu and Google. The Motley Fool owns shares of Baidu and Google. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited

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