Baidu.com (BIDU)

If one does the math...it is evident that this company will grow exponentially. However, must account for the instability of the government.

I think it is a good gamble...

The enforcement of intellectual property rights may lead to potential lawsuits from Yahoo! (YHOO) regarding the copyright on Baidu's P4P online advertising platform could force Baidu into a costly legal battle. Additionally, the company was recently caught in a scandal with pay-for-search scheme, where some internet marketers are pressured to pay for ads or their search engine ranking is dropped. This is a problem that the management of Baidu supposedly is addressing, but it bears watching.

Google maps and Google applications will attract a lot of users. Once you go Google, you don't go back!

Finally, there are beginning to be some concerns about the possibility of competition stealing away incremental pieces of market share. While BIDU certainly has the first mover advantage over competition, it is unreasonable to think that in this period of open technology and a dynamically creative workforce, new competitors could not begin to put together a product that rivals Baidu’s offering. As Alibaba and Yahoo invest in their Chinese presence, and Google partners with China Mobile, it remains to be seen whether either of these competitors can begin to cut in on Baidu’s dominant presence. It would appear unlikely that either would be able to eclipse Baidu’s solid lead, but even taking a few percentage points away could cause investors to hold a more cautious view and knock the ethereal multiple down a couple of notches. I think it is time to exercise caution on Baidu and may possibly even consider shorting the name should the pattern begin to break down.