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Sherman So

Focus Media Holding, the country's largest out-of-home media company, has irked investors who claimed the company kept issuing misleading revenue projections.
'They misled investors twice,' said an analyst.  'Now, everyone hates them.
'First, it was the snowstorm  at the beginning of the year. They said it was not affecting their business. But when [disappointing] results were announced, they blamed  them on the snowstorm.
'Then, when they had an analyst day in New York, they promised everything was all right. And, again, they failed to deliver.'
Shares of the Nasdaq-listed firm plunged 45.12 per cent to US$8.83 on November 11, the day after the latest announcement, before  they dropped to US$6.99 on Friday. The stock was trading at US$57.13 at the beginning of the year.
The third-quarter results missed analysts'  expectations by a modest margin. Revenue was US$224.8 million, shy of the consensus estimate of US$231.7 million, while  earnings were  39 US cents per share, mostly in line  with estimates.
The real disappointment was the fourth-quarter guidance - that revenue  would be between US$190 million  and US$200 million,  significantly lower than the consensus estimate of US$248.4 million.
All the major investment banks, including Goldman Sachs, Deutsche Bank, Merrill Lynch and Morgan Stanley,  have downgraded Focus Media to neutral or underperform.
'After a very high-profile investor conference in New York City in September, Focus Media missed its third-quarter guidance and fourth-quarter outlook,' said James Lee, an analyst with Sterne Agee.
'We were surprised that the shortfall was due to Allyes, the online advertising agency that has always performed well in the past,' he said.
'It is an unfortunate third strike  against the company this year, after the wireless write-off and the snowstorm guide-down earlier.'
Earlier this year, Focus Media had to close down its mobile advertising unit  because CCTV, the mainland's dominant television station,  accused it of being the chief source of short-message spamming.
Chief executive Tan Zhi told analysts  'the macro headwinds'  Focus is seeing are the most severe in the recent history of the  mainland advertising market.
The company said it had experienced a negative impact from the global financial crisis and slowing consumption weighing on advertiser sentiment.
Turning cautious in the face of an economic slowdown of uncertain magnitude, some advertisers that had previously committed budgets had postponed their campaigns  until next year.
The company said it expected a decrease in sales  at most of its businesses  - 5 per cent for both the  LCD advertising network in commercial locations and the residential advertising network, and potentially 50 per cent for its advertising network in retail stores.
But whatever happens, Focus Media, an investor  darling that saw its price double and double again  after it listed in mid-2005,  will have a hard time convincing investors again that it is a sure bet.
'We believe investors will keep Focus Media in the penalty box for the foreseeable future,' said Mr Lee.
Out of focus
Founded in 2003, Focus Media Holding is the mainland's largest digital media group offering a wide range of 'out of home' advertising platforms
Listed on the Nasdaq Composite Index in July 2005 with an offer price of US$8.50
Reached a peak of US$65.50 on November 6 last year
Fell below its offer price last week, closing at US$6.99 on Friday
SOURCE: BLOOMBERG



Focus Media's credibility at stake as it disappoints investors again