Investopedia: How Far Will Baidu Follow Google's Map

Often called the "Google (Nasdaq:GOOG) of China", Baidu (Nasdaq:BIDU) has indeed rewarded investors with exceptional growth for some time. While the Chinese internet market is far from mature, the question remains whether Baidu will look to become such a wide-ranging technology company. It is an interesting dilemma - stick and stay in a market that can still pay, or divert resources toward becoming a more well-rounded company.

Growth, Growth and More Growth  
Baidu reported that second quarter revenue jumped 78%, beating estimates by about 5%. The number of paying clients rose 17% from last year (and 9% from the first quarter), while the revenue per client spiked up 52% (and 29% sequentially).

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Investopedia: Will Social Gaming Keep Electronic Arts Relevant?

The fad of the day is social and mobile gaming, and investors are more than a little fired up over the upcoming IPO of Zynga. While some people dread seeing notifications from games their friends are playing on platforms like Facebook, others cannot get enough of them and buy smartphones and tablets, in part on their ability to support gaming. Not wanting to get left behind, Electronic Arts (Nasdaq:ERTS) is making a major financial commitment to becoming a player in this space.


The Latest Deal
Electronic Arts announced Tuesday night that it would acquire PopCap Games, publisher of games like Plants vs. Zombies and Bejeweled, in a cash-and-stock deal. Electronic Arts will be paying $650 million in cash and $100 million in stock up front for the privately held Seattle-based game company. But scaled earn-outs could push the total deal price north of $1.3 billion if PopCap delivers cumulative two-year operating income of over $343 million.

Any way you slice it, this is a rich valuation on the fundamentals. PopCap does boast over 150 million installed games, but it produced about $100 million in revenue last year (though reportedly with a growth rate in the vicinity of 40%). To the extent that traditional game publishers like Electronic Arts, Activision Blizzard (Nasdaq:ATVI) or Take-Two (Nasdaq:TTWO) are comparables, the 7.5 times trailing sales that Electronic Arts is paying (just based upon upfront consideration) is about triple the going rate. 




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