UPDATE: Credit Suisse Downgrades Baidu to Underperform on Competition Concerns

Credit Suisse lowered its rating on Baidu

from Neutral to Underperform and Credit Suisse commented, "Baidu is facing multiple challenges: (1) a weaker-than-expected advertising market; (2) intensifying competition from new entrants; and (3) difficulty to monetise mobile search traffic. We believe rising competition, particularly from Qihoo, will lead to: (1) a lower market share, as advertisers will use the competitors' keyword prices as reference; and (2) lower margin, as Baidu will need to pay higher salaries to keep top engineers and needs a higher traffic acquisition cost (percentage of revenue), as competitors will try to cooperate with Baidu's third-party websites. Separately, according to industry sources, mobile search accounted for 30%+ of Baidu's traffic which is likely to rise to 50% in 3Q13. But the company generates only 2–3% of total revenue from mobile search." Baidu closed at $114.29 on Monday.