Focus Media Shares Popped: What You Need to Know

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  ) , a digital interactive media provider in China, shot higher by as much as 13% earlier today after it announced a new dividend policy for shareholders.

So what: Just one day after again rebutting Muddy Waters' allegations that the company fraudulently misstated the size of its digital advertising network, Focus Media took another step in repairing its image by announcing the introduction of a dividend set to begin in 2012. Focus Media will be paying out 25% of its non-GAAP net income from the preceding fiscal year in equal payments over four quarters. In addition, the company plans to reserve up to an additional 30% of its non-GAAP net income to be used for future dividend increases or share repurchases.

Now what: Why can't all Chinese stocks respond by offering a dividend when their accounting practices are questioned? I still can't say that I'm sold on any Chinese small- or mid-cap companies -- especially with allegations surfacing yesterday regarding possible (but as of yet unconfirmed) improper actions by Perfect World CEO Michael Chi -- but this is definitely a step in the right direction. A few more quarters of transparency could go a long way to changing my opinion on Focus Media.

Craving more input? Start by adding Focus Media to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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