A Change In Google's (GOOG) Tone on China - Analyst

Analysts at Pali Research commented on Google (Nasdaq: GOOG) today saying there is a change in the company's tone regarding its China business.

The firm notes: "Over the weekend Google's CEO expressed that the company may stay in China if it can obtain some agreement with the Chinese government. Following that statement, Google China’s PR Director Wang Jinhong said it has resumed normal operations and employees have returned to their duties (Marbridge Daily article). Also, key management published a statement on its official China blog refuting speculation that Google China is dismissing employees and shutting down business."

The firm said the Google’s situation is still evolving. They said in the worst case, Google could shutdown its google.cn site (but not its business in China). They believe Google generates the majority of its ad revenue in China from google.com instead of google.cn. The firm noted that several sales agencies have publicly expressed that even if Google shuts down google.cn, their business would not be significantly impacted and they would continue to sell ads on google.com.

Pali said as the story evolves the initial positive excitement on Baidu (Nasdaq: BIDU) should calm down.

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