Google’s threatto leave China has not been well received by shareholders. The Internet giant had enjoyed a100% growth in share price during 2009, peaking at $629.51 a share in early January.
The news of Google’s potential withdrawal from China has seen this share price tumble $49 to its current price [at the time of writing] of $580 per share.
This strong growth in share price, cumulating in the 52 week high of $629.51 in early January put the market capitalisation at $199 bn, almost four times itsmarket capitalisationof $50 bn in 2004 and still more than 8 times Yahoo’s current cap.
Since the China announcement and share slide, the market cap has dropped $15bn to its current capitalisation of $184 BN. That is the equivalent of losing $1.5 bn capitalisation for every day of trading this year.
The bad news for Google has only meant great news forBaidu[Nasdaq:BIDU], China’s biggest ‘local’ search engine which stands to gain the Google market share if they leave town. News of Google’s threats boosted Baidu’s share price (traded on Nasdaq) jumping $48 per share overnight on the news. Baidu is now trading on a near high of $467 per share, up from $130 per share at the start of 2009.
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But Google has not been the only Western search engine to struggle with tapping the Chinese market. Yahoo have shown support for Google’s stand on censorship which has drawn them into more conflict with their Chinese partner,Alibaba[HKG:1688]. The pair havealready had disagreementsover Alibaba’s dwindling share of the Chinese search market and their potential alignment to the Chinese Government may clash with Yahoo’s stated support of Anti Censorship. Yahoo owns 40% of Alibaba.
The China ‘issue’ doesn’t look to be going any time soon withBloombergreporting fresh talks taking place between Google and the Chinese Government. In the meantime shareholders can look forward to the latest earnings report, published on Thursday and watch closely asmore Baidu executives leave in a hurry.
Story byJamie Riddell
Jamie Riddell is the Co-Founder and CEO of Digital Tomorrow Today where he works to identify the coming digital changes and translates them(show all)Jamie Riddell is the Co-Founder and CEO of Digital Tomorrow Today where he works to identify the coming digital changes and translates them into actionable strategies for today’s market.
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