This page has been archived and commenting is disabled.
Muddy Waters Reiterates "Strong Sell" On Focus Media (FMCN), Says Shares Remain "Uninvestable"
The Muddy Waters boys continue their fight with their latest fraud target.
Just released:
FMCN’s partial response to our 80-page November 21, 2011 report reinforces our Strong Sell rating.
FMCN’s response admitted that our estimate of fewer than 120,000 LCD screens showing full motion video advertisements is correct. Despite this admission, FMCN denied that it was fraudulently overstating the number of displays in its network because the 178,382 displays it discloses include 62,656 digital picture frames. FMCN’s response stated that it does not also count these digital picture frames in its poster segment. There is strong evidence that FMCN does in fact double count these digital frames. However, in response to our report and in contrast to previous 20-F filings, FMCN has expanded the definition of its LCD commercial display network beyond full motion video, which makes a clear and final resolution of this point unlikely. Therefore, FMCN at best prompted investors to think it had more motion displays than it does, and at worst fraudulently overstated the size of its LCD commercial display network. Both possibilities raise concerns about the health of this business line.
FMCN has fraudulently overstated the size of at least one other business line – through 2008, FMCN claimed its movie theater network was 17.6x the size of the potential market.
FMCN’s response did nothing to dispel our concerns about its acquisitions – namely that it deliberately overpays for, and unduly impairs in order to improperly give away, a substantial portion of its acquisitions. It is still clear that FMCN did not actually purchase six purported mobile handset advertising businesses, even as VIEs.
FMCN’s response that insiders’ self-dealing was to show “confidence” in the businesses is almost ridiculous enough to not merit a mention in this report. FMCN’s response cites a dubious valuation report as support for self-dealing in Allyes, yet FMCN does not provide answers as to why two outside individuals were allowed to earn $20 million on the transactions.
We believe that FMCN’s impending “independent” verification of the number of LCD screens in its network is likely to be compromised. There is precedent for this statement – FMCN’s audit committee previously undertook a flawed investigation into possible improprieties. As we discussed in our initial report, FMCN’s board’s is comprised of individuals who are largely entangled with management and whose compensation misaligns their interests from those of shareholders.
We maintain our Strong Sell rating on FMCN mainly because our concerns regarding the viability of FMCN’s core LCD commercial location network remain. This issue, combined with FMCN’s additional misrepresentations about the size of the network, FMCN’s opaque business model (on both the revenue and cost sides), and insiders’ penchant for self-dealing, render FMCN shares un-investable.
»
- 5013 reads
- Printer-friendly version
- Send to friend
- advertisements -
China ... always China.
You must be joking. These shares are better than Greece...
Better than AMR?
and Portugal...
"Uninvestable."
Boo-yah, Cramerica.
http://www.zerohedge.com/news/thestreet-fmcn-8-hours-ago-upgrading-neutr...
LOL! Another Cramer pick. Does John Paulson or Whitney Tilson own this Peking Duck bag of shit?
Remember how MuddyWater fabricated lies after lies to attack SilverCorp, and Tyler worked hard to help spread those lies here at ZeroHedge? Notice how after SilverCorp cleaned up their name via an official audit MuddyWater remained radio silent about SilverCorp, and Tyler, being ever so interested in the SilverCorp case, conveniently skipped that report as well, and, may I add, predictably.
I think it's about time Tyler stop dancing on the MuddyWater string, or at least once in a while check MW's own creditbility a little bit.
Nope, don't remember any of that...
How long ago was this? Shame on the Tyler(s) if this is true. Anyone have a link?
This place appears to be getting more and more Huff Post refugee Dem fkkktards who love the islamic in the white hut.
If you search "Silvercorp" and read both first links, you can see there was no agenda other than reporting. If you had ok timing you would've made 30% or more on this trade.
Here's the link: Independent Audit Vindicates SilverCorp
http://www.theglobeandmail.com/globe-investor/independent-audit-vindicat...
Or Bank of America ? Fannie-Freddie ect .
Italy...
A Chinese company is a fraud. Say it ain't so Joe.
OT: I see Ben is still buying leveraged long ETF's and selling USO and now Ag.
"FMCN denied that it was fraudulently overstating the number of displays in its network because the 178,382 displays it discloses include 62,656 digital picture frames."
This sounds so similar to most all corporate accounting nowadays...
Bravo. Muddy Waters continues to present clear and concise analysis.
Chinese are now producing proof quality silver coins that are even fooling dealers. Watch out...and always get your purchase certified.
Are they capable of creating fraud gold yet like Fort Knox tungsten "gold?" Thanks for the tip.
"render FMCN shares un-investable"....
Maybe so, but they sure are a hoot to day trade !
We're sitting essentially at the 50DMA, with the 200DMA still vectoring downward. Treasuries are still calling bullshit on this short squeeze...err rally. Seems that news flow is rather slow today as well, even with all the crap going on. C'est la vie!
On what? The S&P 500? Muddy analysis.
does this mean that the fucking elevator ads will finally stop being replaced after i fuck them up every time i see them in our elevators?
LOL! Send us a picture. Damn - I wish we have this jacked up crap on elevators in America. Maybe we could reporgram them to show a video of Cramer being beaten.
These screens are in every public intercity bus, in every intra-city bus, sleeper bus (3 or 4), super market and public space. Most public squares in China have huge jumbo-tron sized units with ads running all day. Most commercial centers have them both outside as well as inside commercial retail space and at KFC"s and such.
These things are everywhere.
Also this:
FMCN’s response admitted that our estimate of fewer than 120,000 LCD screens showing full motion video advertisements is correct. Despite this admission, FMCN denied that it was fraudulently overstating the number of displays in its network because the 178,382 displays it discloses include 62,656 digital picture frames.
I'm really not seeing what the huge issue is here. The "digital picture frames" can and DO support video ads, it's just that a ton of them are in residential elevators and no one is willing to pay that kind of money for video ads outside of commercial buildings. Said commercial buildings typically jam the ads in the elevator lobbies and not in the elevators themselves... well, there are exceptions to that of course.
Here's what our complex looks like: There are 8 courtyards, each courtyard has 10 buildings (average... some more), each building has 3 sections, each section has 2 elevators, each elevator has 2 digital ads and 1 static. Doing the math on digital alone that works out to 960 of these damn things just in our complex alone. Each floor on each unit has a static ad as well by the way and each biulding has 22 floors. Add that into the mix and you're looking at 5760 static ads in addition to the 960 digital ones... and oh yes, those fuckers can do video and noise and I fucking hate them... that's usually the limit for me when I bust out the leatherman, rip off the cable sheath and cut the wires.
Here's a typical ad:
http://i.imgur.com/hMfz2l.jpg
And here's a typical elevator (kinda hard to take a single shot getting it all in frame, but you can clearly see the dual digitals and the static in the center:
http://i.imgur.com/JaZ1ql.jpg
edit: so much for inserting images directly, you're gonna have to click the links to see it