Baidu.com, Inc. (ADR) (BIDU) Is Betting on Mobile Search

Baidu’s 77% gross margin trumps Google’s 58% and Facebook’s 73%. The huge gross margins will help when costs swell.  This also allows it to pursue different opportunities that may come down the pike.  More importantly, the company is able to run its marketing campaign without significantly messing with profits.

Baidu boasts a 44% ROE, as compared to SINA Corp (NASDAQ:SINA)’s 3%, and Qihoo 360 Technology Co Ltd (NYSE:QIHU)’s 14%. Additionally, the company’s debt to equity ratio of 0.40 is at acceptable levels, despite being higher than its competitors. Nonetheless, with cash of $5.39 billion against a debt of $1.90 billion, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) should have no trouble with liquidity. SINA Corp (NASDAQ:SINA), on the other hand, only has a cash pile of $681 million, while Qihoo’s cash of $951 million is balanced by $270 million in long term debt.

The bottom line

Baidu is certainly at the inception point of its next big thing. With the PC industry diminishing, Baidu needs to join the battle for on smart devices. You have to be delighted at the way Baidu has attacked mobile search.  Soon, mobile devices will dominate much of the computing industry.  The competition will be intense and developing innovative products will be critical.

Moving forward, Baidu is definitely set to widen its user base for the mobile platforms.  In fact, its spending on mobile search may trigger a long term rally.  And that’s because Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is betting heavy on an industry that will determine the future of computing.

The article Baidu Is Betting on Mobile Search originally appeared on Fool.com and is written by Nicholas Kitonyi.

Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool recommends Baidu, SINA , and Sohu.com. The Motley Fool owns shares of Baidu. Nicholas 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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