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Focus Media Bans Chinese Wireless Spam, Announces Quarterly Results

After a television program uncovering Focus Media's (FMCN) subsidiary's incessant sending of wireless spam messages was aired on China's state-run network last weekend, the company has now responded to rumors while at the same time reporting quarterly revenue growth of 21.9%.

The company's subsidiary Focus Media Wireless provides advertising services for business customers by delivering advertisements to mobile phone users in China through their mobile handset devices. The company says in the third quarter of 2007, that Focus Media Wireless accounted for 9.2% of Focus Media's total revenues and the subsidiary generates revenues from fees paid by its advertising customers. The company states that none of the services Focus Media Wireless provides today requires a Value-Added Telecommunication Service Provider License in China. There had been rumors that Focus Media Wireless had lost its Telecommunication Service Provider License.

Advertising service revenue from Focus Media Wireless in the fourth quarter of 2007 was US$16.0 million, up 355.8% from US$3.5 million in the fourth quarter of 2006 and 14.0% from US$14.0 million in the third quarter of 2007.

The television show was aired on March 15, World Consumer Rights Day, and Focus Media says it does not approve sending advertising messages to mobile users without user consent. It has a toll-free customer service number in China for spam reporting, and the company says it has established an internal policy to strictly prohibit sending SMS or MMS messages without the explicit consent of the receiving mobile user.

The company's unaudited financial results for the fourth quarter and full year ended December 31, 2007 show total revenues grew 171.4% year-over-year and 21.9% quarter-over-quarter to US$184.6 million. Net income for the fourth quarter was US$43.8 million or US$0.34 per fully diluted ADS, and in the fourth quarter, digital out-of-home advertising revenue was US$111.0 million, up 75.3% year-over-year, and 17.2% quarter-over-quarter.

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