Baidu (NASDAQ:BIDU) is China's Google (NASDAQ:GOOG), but the company is facing tough competition from emerging players in the market. Moreover, in the U.S., the likes of Groupon (NASDAQ:GRPN) are threatening Google's superiority. So, which of these three companies should investors buy for the long run? Let's find out.
Baidu has huge opportunity for LBS and online-to-offline. Its capability to connect query to fulfillment is an extremely powerful value proposition for the existing customer base of large to small-and-medium-sized enterprises, and new potential customers such as local merchants.
Baidu's LBS offering continued to make impressive progress in the quarter with its mobile maps extending its lead by gaining market share. The monthly active users on Baidu Maps for mobile grew 30% from the previous quarter to nearly 190 million. There was 80% quarter on quarter increase in the number of transactions on its map platform, including hotel bookings, movie ticket purchases, group buying and taxi. And Baidu is constantly expanding its point of interest database which is already the largest in the industry and is adding ever richer content.
- Warning! GuruFocus has detected 4 Warning Signs with BIDU. Click here to check it out.
- BIDU 15-Year Financial Data
- The intrinsic value of BIDU
- Peter Lynch Chart of BIDU
Baidu merged its group buying platform with Nuomi in the first quarter and rebranded the platform as Baidu-Nuomi and has witnessed solid growth throughout the integration process. Baidu-Nuomi is now expected to be in a great position to lead China's growing group buying market.
The online video operation iQiyi of Baidu displayed very impressive performance and going forward, the long-term prospects for online video and iQiyi are very attractive.
Baidu continues to invest in improvements to its technology coupled with driving awareness and adoption of its existing services. The spending on sales and marketing, research and traffic acquisition increased in the first quarter, and it boosted its marketing efforts around the Chinese New Year period to promote its mobile products. These sorts of investments are crucial and directly contribute to the growth of its business. Further, the company remains prepared to deploy cash aggressively where needed to support its growth momentum.
Google on the other hand has entered into strategic partnership in January this year with open Automotive Alliance to bring androids into the cars and to strengthen this move the company has announced Android Wears, a project that extends androids to wearable in March this year. Besides the company is working with several consumer electronics manufactures, chip makers and fashion brands as developers are coming up various new gazettes that will definitely make huge impact in the results for the company.
Additionally Google anticipates strong product adoption momentum worldwide in its enterprise segment. Google has launched Chromebox for meetings and providing the companies to have high-definition video meetings through the power of Google+ Hangouts and Google apps. Google is also investing heavily in the Google Cloud platforms as the company has noticed positive remarks on its most recently announced products.
In addition, Google is playing a large part in every day more businesses, governments and schools as they start using Google apps to work better together including the state of Sao Paulo who moved to Google apps for more than 4 million students and 300,000 teachers and staff which will undoubtedly increase its profitability.
Groupon goes international
To improve its international operations and reduce losses in Rest of the World, Groupon has made significant progress in this direction. Most of the losses incurred by the company were on account of TMON’s acquisition and marketing. It also incurred a one-time costs related to closing Groupon Korea. These all can be categorized as one time losses and if we exclude them, then its losses have improved on a year over year basis. And moving forward the management expects these losses to improve in the Rest of the World.
In addition to this Groupon observed a considerable growth in its mobile business. According to the management, “We are no longer becoming a predominantly mobile business; we are a predominantly mobile business.” The company is also working to converge Local (which literally means wherever you are) and Mobile (uses proximity to enhance the buying experience). As these two combine there is great opportunity for the company to grow.
Overall the management is pleased with the progress it has made across all its initiatives in the quarter. And For the rest of 2014, the company remains focused on execution of its strategies, both in North America and international markets.
So, all three companies seem to be making positive moves in the market. Investors should consider taking a closer look at all three and decide which one suits their portfolio.