Focus Media on China's Ad Market and Where Chinese Companies Expect to Find Future Growth (FMCN 2Q05 Conf Call Quotes)

Focus Media (ticker: FMCN), a commercial building and in-store advertising network operator reported Q2 2005 earnings results earlier this month. As we know from China Mobile (ticker: CHL), Chinese companies are struggling to find new sources of growth. Where do they expect to find this growth? CEO Jason Jiang and CFO Daniel Wu discussed this and other topics during management's earnings results conference call:

On China's Advertising Market

....we have not seen any sign of decline in advertising spending or any sign of economy slowdown in China. And actually, Jason (Editor: CEO Jiang) believes that in the future, if that ever happens....advertising spending budget allocation towards new media will actually increase, as advertisers will be more selective in terms of what they choose, which media they choose to advertise in the situation that this economy slows down.

On Revenue Breakdown

....approximately 70% of the revenue is still from Beijing, Shanghai, Guangzhou and Tianjin. And those, from the very beginning, are our directly-owned network.

On Future Growth

....advertisers, they are moving towards the second-tier, third-tier cities, such as the mobile phone advertisers, China Mobile....

....we are basically providing them the ability to reach to those cities which they think the future growth of their -- for example, the mobile penetration will increase with the growth in (indiscernible) coming from.

....growth is coming from the tier 1 cities....Beijing, Shanghai, Guanzhou, Tianjin....

....tier 2 cities....those cities are the key revenue growth drivers for us going forward.

....the cost of entering those cities are actually very, very low.

(Quotes are from the CCBN StreetEvents transcript.)

FMCN chart.

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