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Focus Media Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Focus Media (Nasdaq: FMCN  ) plunged after its audit committee published the first of two studies regarding the number of screens showing its ads. Focus Media operates an outdoor digital advertising network in mainland China and Hong Kong.

So what: The report is an attempt to respond to fraud allegations published last month by short-seller Muddy Waters. At issue, the firm says, is a gross overstating of the number of television screens showing Focus Media ads. Muddy Waters also accuses the company of overpaying for acquisitions in order to mask losses.

Now what: Focus Media still expects another third-party report, but the initial findings -- that Focus Media's published network data is essentially correct -- throw cold water on Muddy Waters' assertions. You just wouldn't know it from the stock action. Do you believe the report? Would you buy shares of Focus Media at current prices? Let us know what you think using the comments box below.

Interested in more information about Focus Media? Add it to your watchlist by clicking here.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

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Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 15, 2011, at 7:58 AM, Medicalrecordman wrote:

    So when (if ever) is Muddy Waters going to be sued by companies whereby they've printed false information and manipulated the market downward in their favor ? Obviously MW has reported true information as well, but they are very good at twisting the story. Seems to me like any "twist" whatsoever should have a penalty attached. Oh I forgot, Carson Block's a lawyer and "twist" is what lawyers are all about. Go to law school and learn how to lie, cheat and steal. Gotta love America.

  • Report this Comment On December 18, 2011, at 3:18 PM, mountain8 wrote:


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