Muddy Waters Rates Focus Media (FMCN) a Strong Sell; Calls Co. the 'Olympus of China'
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Price: $27.42 --0%
Rating Summary:
7 Buy, 1 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
7 Buy, 1 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Known-short seller Muddy Waters began coverage on shares of Focus Media Holding (NASDAQ: FMCN) with a Strong Sell rating Monday afternoon.
Shares of Focus Media are trading down roughly 50 percent on the day following the Muddy Waters report. Traders should also be watching other stocks within this tumultuous group: shares of Baidu (Nasdaq: BIDU) are currently down 6.3 percent, shares of SINA (Nasdaq: SINA) are down nearly 12 percent, Sohu.com (Nasdaq: SOHU) shares are down almost 5 percent, and shares of Youku.com (Nasdaq: YOKU) are down 11 percent.
Muddy Waters questions whether Focus Media's LCD unit is viable as the firm believes the company has been wrongly overstating the number of screens in its LCD network.
Like Olympus, Muddy Waters notes Focus Media has been purposely overpaying for acquisitions and has $1.1 billion in total write-downs since 2005. With the write-downs being equivalent to one-third of the company's present enterprise value, Muddy Waters calls the acquisitions more "destructive than Olympus’s to shareholder value."
Through research and investigation, Muddy Waters claims to have found Focus Media has not actually acquired some companies previously disclosed as being bought.
Muddy Waters said, "FMCN has written at least 21 acquisitions down to zero and then given them away for no consideration. We show that many of these write-downs are not justified. There are several possible nefarious reasons FMCN gives acquisitions away, including doing so may put FMCN’s problems beyond the reach of auditors."
The firm suggests insiders of Focus Media have profited at least $1.7 billion since the company's IPO in 2005.
Shares of Focus Media are trading down roughly 50 percent on the day following the Muddy Waters report. Traders should also be watching other stocks within this tumultuous group: shares of Baidu (Nasdaq: BIDU) are currently down 6.3 percent, shares of SINA (Nasdaq: SINA) are down nearly 12 percent, Sohu.com (Nasdaq: SOHU) shares are down almost 5 percent, and shares of Youku.com (Nasdaq: YOKU) are down 11 percent.
Muddy Waters questions whether Focus Media's LCD unit is viable as the firm believes the company has been wrongly overstating the number of screens in its LCD network.
Like Olympus, Muddy Waters notes Focus Media has been purposely overpaying for acquisitions and has $1.1 billion in total write-downs since 2005. With the write-downs being equivalent to one-third of the company's present enterprise value, Muddy Waters calls the acquisitions more "destructive than Olympus’s to shareholder value."
Through research and investigation, Muddy Waters claims to have found Focus Media has not actually acquired some companies previously disclosed as being bought.
Muddy Waters said, "FMCN has written at least 21 acquisitions down to zero and then given them away for no consideration. We show that many of these write-downs are not justified. There are several possible nefarious reasons FMCN gives acquisitions away, including doing so may put FMCN’s problems beyond the reach of auditors."
The firm suggests insiders of Focus Media have profited at least $1.7 billion since the company's IPO in 2005.
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