Sina Can't Catch a Break, Even After Focus Media Deal

Remember Chinese Internet stocks? Think back on the heady days of 2007 when companies like Baidu (BIDU) were being heralded as the Google (GOOG) of the East...

Obviously, that was before the crash and even though Chinese shares suffered some of the worst damage of all during this global bear market, investors remain wary of that once-hot sector.

They still can't get a break.

Yesterday, Sina (SINA), a popular Chinese search engine, bought a big chunk of Focus Media (FMCN), which specializes in digital outdoor advertising. Its shares promptly slumped more than 18 percent.

Oppenheimer's Jason Helfstein had this to say in a morning note, where he likes the deal but questions the lack of a shareholder vote:

• No Vote? Hmm... One major "wrinkle," in our view, is the lack of shareholder vote, which we believe would pressure SINA into offering more attractive terms.
• Time to rethink Sina's direction. In our view, Sina is absorbing a more mature asset with potentially slower long-term growth and more competition. Meanwhile, SINA shareholders may view this as a change in strategy (buying beaten-down assets at depressed prices, vs. focusing on growing its business organically). That said, it is hard to criticize the deal in its current form, given the attractiveness of FMCN's core assets.

More here.

Comments

[kagame:]

FMCN valuation is just bonkers right now. Post deal the residual company is priced into the stock for $0 right now. Big fat goose egg.

Thats free money for FMCN longs. SINA just needs to not collapse post CC and I'm loading up FMCN, and may go short SINA also.

Feb 26 04:37 AM