Baidu Bites Back at Qihoo 360

Qihoo 360 invaded Baidu's home turf of Chinese search, and now Baidu is relishing the chance to be the away team.

China's leading search engine issued a press release yesterday, proclaiming that its antivirus software suite has received certification from West Coast Labs.

Baidu Antivirus was introduced four months ago as a way free way for users on Windows desktops, laptops, and tablets to protect files and browsers from viruses and other online maladies.


There's no denying why Baidu entered the antivirus market. This is where Qihoo 360 has earned its reputation. Given the popularity of its free antivirus solutions and its popular browser, Qihoo 360 decided the time was right to roll out a search engine last summer.

The new search engine has proven popular, and the market's been pounding Baidu ever since. If Baidu can find a way to beat Qihoo 360 at its own Internet security game, the logic follows that it would be able to win its way back as a Wall Street and search darling.

There's good news on the search front.

T.H. Capital reports that recent gains at Qihoo 360 in search have come largely from non-Baidu providers. The report -- as retold by Barron's -- shows that Baidu's market share in terms of page views has only declined from 70.1% to 70% over the past two months. Qihoo 360 is still gaining. Its share of China's lucrative searches has grown from 13.8% to 14.7% in that time. However, it continues to be a case of consumers that weren't on Baidu switching to Qihoo 360.

Baidu's market share was 71.5% at the start of the year, but if it's starting to stabilize here, that's almost as welcome news as it would be if Qihoo 360 begins losing market share.

Flat market share doesn't mean flat growth. The market itself is expanding at a heady clip, and Baidu continues to expand into new product categories and new geographical regions. Analysts see revenue climbing 36% this year and 29% come 2014. It's against this backdrop that the stock is trading for less than 16 times next year's projected earnings.

Qihoo 360 is growing faster, but it also trades at a richer multiple. The best bet for investors continues to be to buy both companies. There doesn't have to be just one winner, and naysayers that have relished Baidu's slide since peaking last year will need to remember that as Baidu continues to claw its way back into the market's good graces.

Betting on Baidu
Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu. The Motley Fool's brand new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

The article Baidu Bites Back at Qihoo 360 originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Baidu. The Motley Fool owns shares of Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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