Piper Jaffray Removes Focus Media (FMCN) from Alpha List; Cuts Estimates

April 9, 2008 2:34 PM EDT
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Price: $27.42 --0%

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    Up: 14 | Down: 3 | New: 43
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Piper Jaffray removes Focus Media (Nasdaq: FMCN) from its Alpha List, but maintains a Buy rating. The firm lowered its earnings estimates on Focus Media, reflecting uncertainty in regards to the long-term viability of the Company's wireless segment. As a result of the lowered estimates, Piper reduced its price target on Focus Media from $86 to $68.

Specifically, the firm has a less optimistic outlook on shares of Focus Media as, at the end of March, China Mobile (NYSE: CHL) shut down the SMS interconnection gateway between it and several service providers including Focus Media. Piper said, "We believe that approximately 80% of Focus Media's wireless business is at risk due to the measures undertaken by China Mobile." Furthermore, the firm notes that if China Mobile takes this business in-house, it could permanently disrupt Focus Media's mobile business.

Taking into account the concerns, Piper removed the majority of Focus Media's mobile business from its model. The firm lowered its FY08 and FY09 EPS estimates from $2.14 to $2.05 and from $2.86 to $2.71, respectively. The Street is currently expecting Focus Media to report $2.15 in FY08 and $2.76 in FY09.

Focus Media Holding Limited operates out-of-home advertising network using audiovisual television displays in the People's Republic of China. [BCS]

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