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Last week advertising leader Focus Media released its latest quarterly earnings report, and the main news was from its mobile advertising division:
Total GAAP revenues grew 214.7% year-over-year to $161.6 million. Total GAAP revenues exclude $11.3 million of revenue from our mobile handset advertising business which is classified as discontinued operation...
GAAP net loss for the first quarter was $53.8 million or $0.42 per fully diluted ADS. The GAAP net loss includes a non-recurring loss of $79.3 million resulting from the restructuring of our mobile handset advertising business.
Focus Media's problems started on March 15 (World Consumer Rights Day), when a Chinese television program exposed the company's practice of sending unlicensed SMS and of sending millions of spam SMS. While the wireless division is essentially out of commission for the near future, the rest of Focus Media's business is going strong. We have long been skeptical of wireless advertising in China, with much of current revenues coming from the waves of spam and illegal text messages.
The recent announcements regarding operator restructuring are a good sign for the future of the sector. We don't expect it to really take off until 3G networks are up and running and at least a few million users are using their new 3G phones for internet browsing and other advanced features. And since that time is in all likelihood at least a year away, Focus Media should have time to rebuild its wireless business around a 3G focus.
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