To US’ monopoly of giant web entities – Google, Amazon, eBay, Yahoo, et al – China too has some matching answers. The first that comes to mind is Baidu, the vernacular search engine that ranks third in terms of searches made in August last (3.2 billion searches, 5.2% global search share).
Baidu trades handsomely on NASDAQ (BIDU) at a forward price to earnings ratio of 57.78 based on its projected 2008 income. At around $342 a share its market cap is a phenomenal $11.66 billion.
And now a piece of that cake is slated for claim by another Chinese giant-in-the-making, Alibaba, one of the web’s largest trade portals.
Alibaba’s IPO opened this Monday, and it is going to be the biggest tech IPO since the search giant Google raised $1.66 billion in 2004. Sensing a robust demand for its scrip, Alibaba revised the IPO price to the band between $1.54 and $1.73 a share.
This means the company can raise $1.49 billion based on the upper price band, and in fact it has the option of raising more subscriptions after the IPO trading.
At the time of IPO Google had priced its share at a P/E multiple of 90, while that of Alibaba ranges far higher – between 94.5 and 106.3 times the 2007 earnings.
Pursuant to its sterling Q3 performance, Google quotes at 52.39 P/E multiple even as the forward P/E remains at an attractive 32.66 times.
Will Alibaba do an encore like Google? Only time will tell. If it does it will indicate that the tech stocks still rule the roost, and that is good for Indian tech stocks as well, which are seeing severe beating on the face rising rupee against dollar.
[Collated from TOI, Oct 25]