UPDATE 4-Google confident of getting China web license

* Chief Executive Schmidt expresses confidence

* China says reviewing application, no timeframe

* Analysts see compromise, tough road ahead
(Adds analysts quote, details)

By Alexei Oreskovic and Paul Thomasch

SUN VALLEY, Idaho, July 8 (BestGrowthStock) – Google Inc (Read more about Google Stock Analysis) (GOOG.O: )
Chief Executive Eric Schmidt expressed confidence the company
will secure a license to operate a website in China,
confounding speculation Beijing may shut down its flagship site

Schmidt, addressing executives and financiers at an annual
gathering of the industry’s movers and shakers in the Idaho
mountain resort of Sun Valley, said he expected Beijing to
renew its license to operate a website in the world’s largest
Internet market, but offered no timeframe.

Analysts said Google’s decision to stop automatically
rerouting users to its uncensored search page showed a
softening of stance and willingness to compromise to maintain a
foothold in China, the world’s largest Internet market by

“We would expect we would get the necessary license,”
Schmidt said. “We now expect to get a renewal.”

Google stunned markets and consumers in January when it
warned it might quit the country, saying it would not provide
the censored search results that China requires.

The company’s row with the Chinese government over Internet
censorship and hacking attacks added to a burst of tensions
between Washington and Beijing, which also saw diplomatic spats
over China’s currency, U.S. arms sales to Taiwan and Tibet.

But tensions have subsided in recent months. On Thursday
the Obama administration declined to label China a currency
manipulator, and a decision to allow Google to keep its Chinese
website could remove another source of friction.

In March, Google began to redirect visitors to its China
website to a search site in Hong Kong that provided uncensored
results. [ID:nSGE60C01H] [ID:nLDE66603E]

But last week, Google said it would stop automatically
rerouting users after Beijing indicated it would not renew its
Internet Content Provider license if it continued to do so.

“The government views the January announcement as a loss of
face,” said Edward Yu, chief executive of Beijing-based
research firm Analysys International, speaking before Schmidt’s

“But because Google has now made this move, there is a
chance they will most probably meet in the middle and Google
will get the license.”


China’s Ministry of Industry and Information Technology
said on Wednesday that it was reviewing Google’s license
renewal application but gave no deadline for completion.

Two similar stand-offs in the past, one involving major PC
makers like HP (HPQ.N: ) and Dell (DELL.O: ), and the other global
chip leader Intel (INTC.O: ), ended in compromises that saw
Beijing back down under huge international pressure.

Analysts and investors have discounted a severe curtailment
of Google’s business in the world’s No.3 economy.

Its stock has slid more than 26 percent this year, hit
partly by fears that its stance against censorship will incense
a Chinese government intent on maintaining control over the
flow of information within its borders.

By contrast, local search leader Baidu Inc (BIDU.O: ) has
seen its stock soar about 75 percent since Google’s
announcement on investor hopes for a big market share gain.

An outright license rejection — as expected by some
analysts — could spell future trouble for Google’s non-search
businesses in China, such as Android-based mobile phones, now
carried by the nation’s largest telecoms carriers.

Google’s search business in China accounts for a tiny slice
of the company’s $24 billion in annual revenue. Analyst
estimates of Google’s annual revenue in China range from $300
million to $600 million, but long-term growth prospects are

Google now operates a landing page for its Google.cn
website and clicking anywhere on the page brings the user to
the Google.com.hk site. But if Beijing refuses to renew its
license, the site would be effectively shut down.

Schmidt’s comments come halfway through what has been a
tumultuous year for the company, as the world’s No.1 search
leader deepened its rivalry with iPhone-maker Apple (AAPL.O: )
and social network Facebook.

Google is due to report its second-quarter financial
results next week. Shares in the company ended Thursday up 1.4
percent at $456.56 and were little changed after-hours.
(Additional reporting by Melanie Lee in SHANGHAI; Editing by
Alex Richardson)

UPDATE 4-Google confident of getting China web license