Baidu.com, China's largest search engine, yesterday filed the paperwork to list on the Nasdaq in the United States, in another step towards its planned US$80 million initial public offering slated for next month.
Analysts expect a positive reaction to the listing, despite legal risks arising from the firm's MP3 search function, which accounts for 22 per cent of its internet traffic.
A recent US Supreme Court ruling said that companies can be held responsible for the illegal file-sharing activities of their customers. The company is already a defendant in two copyright infringement cases in China connected with its MP3 and movie search services.
Baidu uses search algorithms to link to MP3 files hosted on third-party servers, which play in a Baidu-branded pop-up window.
Its prospectus therefore speaks of 'increased risks of being subject to copyright infringement claims relating to our MP3 search service.
'We may be required to change our business model and service offerings ... which would adversely affect our business prospects.'
Nonetheless, most observers said Baidu's services clearly were far enough removed from intentional copyright piracy that it faced little risk of criminal prosecution.
In the first three months of this year, Baidu posted net profits of 2.5 million yuan, up from 1.03 million yuan the same period a year ago. Net revenues during the respective periods were 42.62 million yuan and 17.15 million yuan.
Pricing for the offering is not expected until next week. A source said the roadshow for Asian and European investors would start on July 21, followed by one for US institutions on July 26. Final pricing is expected on August 4, with trading commencing the following day.
Another Nasdaq-listing candidate, mainland advertising firm Focus Media, yesterday priced its shares higher than the original indicative price range.
Focus Media priced its shares at US$17 - above the stated range of US$14 to US$16 - according to sole book-runner Goldman Sachs.
The shares were set to start trading on the Nasdaq yesterday.