The competition, however, is nowhere to be seen this quarter -- probably because Focus bought Target Media, the No. 2 player in the market, a few months back. Amusingly enough, the company came in with $61.1 million in revenues for the third quarter, up more than 200% year over year and roughly 20% sequentially. Why is this amusing? Well, the stock was slammed 8% last quarter after the company lowered guidance below analysts' estimates, which coincidently were $60 million. Sandbag much? Note as well that margins continued to rocket upward in this quarter; gross margins hit 65.3%, up from 58.9% in the previous quarter alone. Operating margins enjoyed more of the same, with nearly a 1,000-basis-point jump sequentially, from 33% to 42.3%.
Much of the company's growth has come from acquisitions like Target Media and, more recently, Appreciate Capital, which essentially owns the rights to sell advertising previews to more than 120 theaters in China. While this has caused substantial share dilution -- diluted shares outstanding are up about 44% year over year -- it makes sense, since Focus it is essentially cutting off many competitors at the knees before they can become real threats. In a quickly growing market, such an aggressive strategy can build short-term competitive advantages.
Note that I said nothing about the long term. Decisions by Wal-Mart
I'm inclined to think that potential competitors like Viacom
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