UPDATE 1-Google to end contracts with 7 ad agents by Oct 27

* Google says termination of contracts to take effect Oct 27

* Development positive for Baidu – analysts
(Adds details, analyst quotes)

SHANGHAI, Oct 19 (BestGrowthStock) – Google Inc (Read more about Google Stock Analysis) (GOOG.O: ) said on
Tuesday its termination of contracts with seven large Chinese
advertising resellers goes into effect on Oct 27, a development
analysts say benefits China’s leading search engine Baidu
(BIDU.O: ).

Google, which faced many operational hurdles since its high
profile tussle with Beijing earlier this year, said in late
September it would terminate the contracts with the seven ad
resellers in China, without giving a reason.

“The letter was sent out to them on Sept. 27… We gave them
a month’s notice,” Cindy Qin, a spokeswoman for Google told
Reuters, confirming it will take effect on Oct. 27.

“We hope to find new resellers to partner with so we can
provide even better service to our advertisers,” Qin said.

Credit Suisse estimated in a note on Monday that the seven
AdWords distributors contributed 1.5 billion yuan ($226 million)
in gross revenue last year or about 40 percent of Google China’s

Google’s termination of the contracts with the resellers has
caused uncertainity in the market and led to slower customer
acquisitions by the search giant in China, analysts said.

“Baidu sales people could use this opportunity for customers
hesitating between two search engines to use Baidu instead of
Google,” said Fiona Zhou, an analyst with JLM Pacific Epoch.

Baidu is China’s leading search engine with more than 70
percent of the country’s search market by revenue.

The firm will report its third-quarter results on Thursday
after the U.S. market close.
($1=6.644 Yuan)
(Reporting by Melanie Lee; Editing by Jacqueline Wong)

UPDATE 1-Google to end contracts with 7 ad agents by Oct 27