After all, what other conclusion can there be when the fading ad mogul decides to acquire a 10% stake in a Chinese foot therapy chain, according to Chongqing Economic Daily.
I'm not worried about the money. Focus Media has gobs of it, closing out its latest quarter with nearly $3 a share in cash. What's killing me is that Focus Media is starting to take on the strangely haggard and clueless appearance of Joaquin Phoenix on the Letterman show.
Many of us were left scratching our heads when Focus Media decided to give away its outdoor advertising supremacy in exchange for 47 million shares of SINA (Nasdaq: SINA ) . I defended Focus Media as an investment at the time, because its stock was trading for less than the value of its cash and eventual SINA payout.
No one expected Focus Media to stay put. After spinning off the SINA shares to investors, Focus Media will be left with Chinese online ad specialist Allyes, a movie theater advertising network, a few conventional billboards, and a lot of yuan. Now it will be trading in some of that dough for a piece of the Andrew Health foot therapy specialist.
"2.6 billion tired feet?"
That was my reaction when I was told about the move during this morning's Rule Breakers analyst meeting. I recommended the stock to subscribers last year, because of Focus Media's reach on 2.6 billion eyeballs. Now I have to wonder how many of China's 1.3 billion citizens need a podiatrist or a foot rub?
Chinese companies often have little choice but to evolve. SINA, Sohu.com (Nasdaq: SOHU ) , and NetEase (Nasdaq: NTES ) once relied on delivering mobile entertainment to wireless handsets as their flagship offerings. Once the government and telcos began to tighten the screws in the niche, they went on to carve out successful businesses in things like online gaming and Web portals.
Focus Media could have gone in so many different ways here. It could have snapped up smaller niche-specific advertisers like AirMedia (Nasdaq: AMCN ) in airports and VisionChina (Nasdaq: VISN ) in mass transportation. It could have also looked to expand outside of China. Instead, it has to do some "diworseification" explaining that is making even the folks at Satyam (NYSE: SAY ) giggle.
And that's the rub.
Other ways to see things: