When will Chinese companies learn?
A new change to send ads only to cell phone users that opt in to receive the messages finds the company slashing its profit and revenue targets by $20 million and $40 million, respectively. That's a lot, since the company was targeting roughly only $55 million in mobile advertising revenue this year.
Focus Media now expects to earn between $1.91 and $2.06 a share in adjusted earnings per share on $860 million to $890 million in revenue. That is still certainly a respectable spurt from the $1.57 a share it earned on $506.6 million in revenue last year, but things could have been so much sweeter if the wireless market weren't so volatile.
The list of companies burned by providing handset media over the years is long. Some of the hottest stocks of 2002 -- multibaggers Sohu.com
It worked out well for the pioneers as they expanded into everything from Internet games to active Web portals. The same can't be said for the companies that followed, such as Tom Online and KongZhong
Focus Media will do just fine without the handset business. It's got plenty of places to plaster its ads like LED billboards, LCD monitors, digital poster frames, and even a boat floating along the Shanghai bund.
The real lesson here is more for the smaller companies looking to piggyback on the success of China's 500 million wireless customers by rolling out SMS products. The only proven way to make money with the cell phone revolution is through the providers like China Mobile
Everyone else may as well be on a slow-moving boat through China, even if that boat has a 1,500 square foot LED screen.
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Longtime Fool contributor Rick Munarriz has been to mainland China just once, but he's longing to brush up on Mandarin and make another go of it. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.