Baidu’s user transition to mobile and rising competition may continue to dampen top line growth, with margins likely to be under pressure in the near term. However, given encouraging new customer acquisition and continued development in the mobile space for future growth.
Mobile search traffic has continued to grow faster than PC search in this quarter, but management notes that the growth rate has been ‘soft’. We estimate that mobile traffic currently contributes more than 25% of Baidu’s total search traffic in 4Q12. We believe mobile search traffic is largely incremental to PC search traffic and, thus do not expect significant cannibalization to PC search traffic. Baidu’s current priority