Young as any Silicon guru, trained up on Infoseek
When leading China search engine Baidu hit the Nasdaq earlier in August 2005, the buying frenzy exceeded anything seen since the Google IPO -- and it made Li Yanhong overnight into one of China's ten wealthiest people.
Before, during and after the launch, commentators and analysts warned that the engine lacked even the rudimentary fundamentals of Google. But the 'vision' of tapping into the search engine most likely to become China's home version of Google was too great a lure for an enormous segment of investors with more dollars than cautionary sense.
Perhaps it was pent-up Google demand -- the Dutch auction style of that IPO made it difficult to get in early enough to cream riches quickly -- but Baidu priced at $US27, opened at $US66 and jumped 354 per cent on the first day of trading, the biggest IPO spash in five years. At the end of the day, a $US27 share was worth $US122.54.
That gave it a market cap of more than $US4 billion.
Is it worth it on fundamentals?
The Standard reported that Baidu recorded a modest profit of $US1.4 million in 2004, while revenues this year have surged, to $US8.4 million in the second quarter from $US5.1 million in the first.
Whatever one might think of this sort of market frenzy, and howevermuch one might believe or disbelieve in the emerging digital class in China, Baidu's President Li Yanhong, known abroad as Robin Li, isn't complaining -- even though the 4 million shares it sold at $27 earned the company a meagre $US109 million.
Overnight he became one of China's ten wealthiest persons -- at least, among those for whom some measure of wealth can be estimated.
State media in China are a bit perplexed by the IPO and the sudden wealth it has conferred on Mr Li, an indication perhaps that the government is of several minds about the creation of such wealth so quickly.
But, if Xinhua is any guide (and it usually is) to the official mind, Mr Li's success is being embraced, if reluctantly, as an example of what can be achieved.
"Baidu's success can be regarded as a good example in China, where few people understand the importance and potential of venture investment in a market economy, compared with a planned economy where all funding comes from the government," Xinhua editorialised in a recent article.
Mr Li is also high on the most wanted list in China for another reason: As an example to expats of why they should come home.
Mr Li returned to China from the US only six years ago, with only a Masters degree and a few years of work at minor player search engine Infoseek behind him.
"Li set up Baidu.com in collaboration with his friend Eric Xu, and soon got his first investment of 11.2 million US dollars from foreign venture capitalists, for whom it is now harvest season," Xinhua said.
(Source: The National Business Review)