Ever since the Chinese marketing titan agreed to sell its juiciest assets to new-media darling SINA
However, there are some interesting dynamics at play once you begin to dissect Focus Media's first-quarter results.
For starters, the businesses it's keeping held up better on the top line than did the more prolific subsidiaries it's selling to SINA. The companies sticking around include Focus Media's Allyes online advertising arm, as well as real-world endeavors including a movie-theater advertising network and a presence in traditional outdoor billboards.
Revenue from continuing operations was $66.7 million, a 14% year-over-year drop. The marketing networks going to SINA -- business that includes Focus Media's LCD displays, digital poster frames, and in-store displays -- posted just $64.4 million in revenue, for a sharp 23% plunge over the past year.
SINA is getting Focus Media's higher-margin operations, though. Non-GAAP income of $3.3 million during the quarter for continuing businesses is a fraction of the $15.3 million that its discontinued operations rang up. However, at least Focus Media's retained subsidiaries were profitable on an adjusted basis.
Focus Media also sees "less than $69 million" in revenue from continuing operations for the current quarter, so we're probably looking at a slight sequential improvement there.
Maybe Focus Media will ping another day on Mr. Market's radar. After all, the deal with SINA isn't a charitable handout. Focus Media will be receiving 47 million shares of SINA, which it will distribute to its shareholders, plus Focus Media still retains $131.9 million in cash.
Focus Media now expects the deal with SINA to close in the third quarter, as delays in receiving antitrust clearance are making a closure during the first half of the year unlikely. Well, that and the fact that we're now just a handful of trading days away from the end of the second quarter.
Focus Media still has a lot to prove without its high-margin strongholds. Allyes is the biggest piece of the pie, but display advertising in China is in a slump. You see the sluggishness in new-media companies such as SINA and Sohu.com
The company's multiplex advertising network isn't as high-tech or elaborate as what our country's National CineMedia
Still, all of these marketing forms have more upside in a country that's early in its growth cycle than they do domestically. After SINA picks way at Focus Media, there may be more meat left on the bone than the market expects.
Other ways to see things:
Longtime Fool contributor Rick Munarriz has been to mainland China just once, but he's longing to brush up on Mandarin and head back. Rick owns no shares in any of the companies mentioned in this story and 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.