No Benefit of Doubt for Focus Media (FMCN)

Focus Media Holding Ltd. (NASDAQ: FMCN) has just posted earnings.  Despite beating estimates, Wall Street isn’t trusting its guidance issues "from the earthquake."

Total GAAP revenues grew 214.7% year-over-year to $161.6 million.  GAAP net loss for the first quarter was $53.8 million or -$0.42 EPS (ADS) after a non-recurring loss of $79.3 million resulting from the restructuring.  On a non-GAAP basis outside of restructuring and other items it recorded $44.8 million in net income with $0.34 non-GAAP EPS.  First Call had estimates at $162 million in revenues and $0.33 EPS.

This is probably not a huge shock when you consider its business, but the company noted that the earthquake in Sichuan province is going to bring down some adjusted ad numbers:

• It put next quarter revenues at $190 to $195 million and EPS at $0.40 to $0.41 on 133 million total average ADS.  First Call has estimates of $0.46 EPS on $201.9 million.
• It revised revenues to $820 million to $850 million, down from previous guidance of between $860 million to $890 million.  Full year 2008 non-GAAP net income is now expected to be between $240 million and $260 million, or $1.76 to $1.91 per fully diluted ADS based on 136 million annual average total ADS outstanding, as down from the previous guidance of between US$260 million and US$280 million.  First Call has estimates at $1.95 EPS on $882 million in revenues.

Because this ad company has a premium to it and because of the China syndrome, Wall Street isn’t giving the company any break at all over the earthquake being tied to the revenues.  Shares were up 2.6% today at $36.79 in regular trading, but shares are down almost 7% at $34.31 in after-hours trading.

Jon C. Ogg
June 5, 2008