Focus Media Holding Ltd. (FMCN)

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Muddy Waters rates Focus Media Holding Ltd. (NASDAQ: FMCN) shares a Strong Sell because of significant overstatement of the number of screens in its LCD network and its Olympus-style acquisition overpayments. The $1.1 billion1 in write-downs from its acquisitions exceed one-third of FMCNâ??s enterprise value, making FMCNâ??s acquisitive behavior more destructive than Olympusâ??s to shareholder value. FMCN insiders have sold at least $1.7 billion worth of stock (two-thirds of FMCNâ??s enterprise value) s

FMCN has been fraudulently overstating the number of screens in its LCD network by approximately 50%. This is similar to China MediaExpress Holdings, Inc. (OTC: CCME), which we reported is a fraud on February 3, 2011. We therefore question whether FMCNâ??s core LCD business is viable.

Like Olympus, FMCN is significantly and deliberately overpaying for acquisitions, writing down $1.1 billion out of $1.6 billion in acquisitions since 2005. These write-downs are equivalent to one-third of FMCNâ??s present enterprise value.