Forget fact search, Baidu fans rush at latest August folly

August has always been the silly season for initial public offerings in internet companies.

The dotcom bubble was born 10 years ago this very week, when Netscape made its debut on the Nasdaq stock market in the US, stunning traders and investors as it shot to almost three times its issue price on its first day of trading.

In August last year Google hit the market with the most closely watched offer of the year, which valued the internet search engine at an amazing US$23 billion.

But for sheer sun-struck craziness, nothing can match last week's Nasdaq offering for Chinese search engine company Baidu.com. Priced at US$27 on issue, Baidu shares promptly shot up when they started trading to reach a high of US$153.98. On Monday, they eased back to close at US$115.50 but that still places them at more than four times their issue price. Baidu's boosters spun a great tale, casting the company as 'the Chinese Google'. Starved of excitement, investors ate up the story.

Initially, the case for investment looked impressive. Baidu is run by the requisite set of bright sparks, all aged under 40. It boasts some slick proprietary software for searching Chinese-language internet sites and it has won a significant market share since being launched in 2001. Today the company is estimated to have between 40 and 50 million devotees, making it the second most popular site among China's 100 million or so internet users.

More to the point, internet penetration is rising fast in China, by about 30 per cent a year according to some estimates, promising rapid growth in Baidu's fan base.