It's struggling exactly when it seems as though the world's most populous nation is humming along just fine. After posting a charge-riddled loss and a steep drop in year-over-year revenue generation last night, there seems to be more to Focus Media than meets the eye.
Focus Media specializes in out-of-home advertising networks. It powers a fleet of 125,000 LCD monitors that display graphical ads in high-traffic areas, and it runs a network of 262,000 in-elevator poster and digital frames. Focus Media operates 130 outdoor LED billboard displays in Shanghai and Beijing, along with a movie theater commercial platform and Web-based initiatives.
China was quick to bounce back from the global recession, but you wouldn't know it from Focus Media's latest financials. Revenue fell by 26% to $166.6 million, weighed down by a 32% hit in its LCD displays and a whopping 50% haircut on the poster frames.
Focus Media reported a huge loss of $0.99 per share, but there are impairment charges baked into that number. Calling off its deal to sell most of its assets to SINA
In short, Focus Media is a mess.
Advertising has been a surprisingly tough market in China this year. Sohu.com
The silver lining for Focus Media shareholders is that their company's balance sheet is backed by $383.3 million -- or nearly $3 a share -- in cash. However, Focus Media's stock has also tripled off its earlier lows, so the stock gains betray the dimming fundamentals as it leaps higher off its cash mattress.
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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 pay another visit. He 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.