Wall Street goes wild for Baidu

Google might be getting out of China, but international investors are going all in on Chinese search giant Baidu, the company that likely stands to gain the most for Google's departure. Here's a report from UBS via the FT's Alphaville blog:

Baidu would benefit most from Google’s departure. The Chinese search engine market is a duopoly with Baidu and Google together accounting for 90% of revenue and 95% traffic market share (Baidu itself has 62% and 74% respectively). Baidu would emerge as the dominant player with even more bargaining power with its customers. And even if Google can successfully solve this problem and continue its presence in China, in our view Baidu will still benefit incrementally from advertisers’ concerns over spending on

We upgrade Baidu to Buy from Neutral and PT from US$380 to US$523. This incorporates a 50% probability weighting to our new base case valuation of $453 (assuming Google continues to operate in China) and 50% weighting to our bullcase valuation of $593 (assuming Google closes its Chinese operations).

Investors don't feel it's likely that another foreign search engine, such as Microsoft's Bing, will step in to fill the void since local affilates are going to be wary about collaborating with another foreign company.

As a weird coda to this story, Yahoo, whose executives were lambasted as moral "pygmies" on the floor of congress two years ago for their role in the arrest of a Chinese dissident, for once look like they've outsmarted their arch-rival. TechCrunch writes;

In retrospect Yahoo has played China far better than Google. It pulled out of the country years ago, knowing it wouldn’t win and owns nearly 40% of the [Chinese internet portal] Alibaba, a company that very definitely knows how to grow in China. Entrepreneur and angel investor in China Bill Bishop —who hasn’t always agreed with my China coverage in the past—pointed this out, adding “Not often Yahoo looks smarter than Google.”


The lost Haitian revival

As Mark Goldberg writes for the Daily Beast, Haiti just can't catch a break. The country, which has been through years of war and upheaval, and remains woefully poor, yesterday was hit with a massive earthquake which has caused critical damage to its major city and capital, Port-au-Prince. Casualties are expected to be massive, and as many as 3 of the country's 9 million citizens are without basic services. What makes it all sadder is that things had, just recently, seemed to be looking up.

Around 800,000 tourists traveled to Haiti last year -- a sizeable number for a small nation.  But 500,000 of them never ventured further than Royal Caribbean Cruise Line's heavily guarded man-made enclave on the northern shore of the island; therefore, they did little good for Haiti's economy. (Royal Caribbean apparently installs most of its own staff in Labadee, seen above, meaning fewer Haitians hired.)

Haitians as well as U.N. staff on the island were battling the country's image as a failing state, a murder and kidnapping capital. Its safety statistics are in fact in line with or lower than those in other Caribbean nations, after spiking in 2004 during the Aristide crisis. 

Just last week, Comfort Inn announced it was planning on building a small hotel on the island. It would have been the only major international chain to have an outpost on Haiti. Additionally, via Tyler Cowen, Haiti was just one of two Caribbean countries expected to have GDP growth in 2010, of around 2.5 percent.

Image via RobinH00d on Flickr