muddy water关于分众的第二份报告原文Word文件下载.docx

muddy water关于分众的第二份报告原文Word文件下载.docx

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UseofMuddyWatersLLC’sresearchisatyourownrisk.Youshoulddoyourownresearchandduediligencebeforemakinganyinvestmentdecisionwithrespecttosecuritiescoveredherein.Youshouldassumethatasofthepublicationdateofanyreportorletter,MuddyWaters,LLC（possiblyalongwithorthroughourmembers,partners,affiliates,employees,and/orconsultants）alongwithourclientsand/orinvestorshasashortpositioninthestock（and/oroptionsofthestock）coveredherein,andthereforestandstorealizesignificantgainsintheeventthatthepriceofstockdeclines.Followingpublicationofanyreportorletter,weintendtocontinuetransactinginthesecuritiescoveredtherein,andwemaybelong,short,orneutralatanytimehereafterregardlessofourrecommendation.Thisisnotanoffertosellorasolicitationofanoffertobuyanysecurity,norshallanysecuritybeofferedorsoldtoanyperson,inanyjurisdictioninwhichsuchofferwouldbeunlawfulunderthesecuritieslawsofsuchjurisdiction.MuddyWaters,LLCisnotregisteredasaninvestmentadvisor.Tothebestofourabilityandbelief,allinformationcontainedhereinisaccurateandreliable,andhasbeenobtainedfrompublicsourceswebelievetobeaccurateandreliable,andwhoarenotinsidersorconnectedpersonsofthestockcoveredhereinorwhomayotherwiseoweanyfiduciarydutyordutyofconfidentialitytotheissuer.However,suchinformationispresented“asis,”withoutwarrantyofanykind–whetherexpressorimplied.MuddyWaters,LLCmakesnorepresentation,expressorimplied,astotheaccuracy,timeliness,orcompletenessofanysuchinformationorwithregardtotheresultstobeobtainedfromitsuse.Allexpressionsofopinionaresubjecttochangewithoutnotice,andMuddyWaters,LLCdoesnotundertaketoupdateorsupplementthisreportoranyoftheinformationcontainedherein.

Beforeviewingthecontentsofthisreport,youagreethatanydisputearisingfromyouruseofthisreportorviewingthematerialhereinshallbegovernedbythelawsoftheStateofCalifornia,withoutregardtoanyconflictoflawprovisions.YouknowinglyandindependentlyagreetosubmittothepersonalandexclusivejurisdictionofthesuperiorcourtslocatedwithintheStateofCaliforniaandwaiveyourrighttoanyotherjurisdictionorapplicablelaw,giventhatMuddyWaters,LLChasofficesinCalifornia.ThefailureofMuddyWaters,LLCtoexerciseorenforceanyrightorprovisionofthisdisclaimershallnotconstituteawaiverofthisrightorprovision.Youagreethatregardlessofanystatuteorlawtothecontrary,anyclaimorcauseofactionarisingoutoforrelatedtouseofthisreportorthematerialhereinmustbefiledwithinone

（1）yearaftersuchclaimorcauseofactionaroseorbeforeverbarred.

I.Introduction

FMCN’spartialresponse1toour80-pageNovember21,2011reportreinforcesourStrongSellrating.FMCN’sresponsereiteratedFMCN’sfraudulentoverstatementofLCDcommerciallocationnetworkscreensbydouble-countingdigitalposterframesalreadycountedinFMCN’sposternetwork.WeknowthatFMCNisdouble-countingpostersbecauseits20-Fwouldotherwisecontainsignificantinaccuracies. 

FMCNhasfraudulentlyoverstatedthesizeofotherbusinesslinesaswell–through2008,FMCNclaimeditsmovietheaternetworkwas17.6xthesizeofthepotentialmarket.

FMCN’sresponsedidnothingtodispelourconcernsaboutitsacquisitions–namelythatitdeliberatelyoverpaysfor,andundulyimpairsinordertoimproperlygiveaway,asubstantialportionofitsacquisitions.ItisstillclearthatFMCNdidnotactuallypurchasesixpurportedmobilehandsetadvertisingbusinesses,evenasVIEs.

FMCN’sresponsethatinsiders’self-dealingwastoshow“confidence”inthebusinessesisalmostridiculousenoughtonotmeritamentioninthisreport.FMCN’sresponsecitesadubiousvaluationreportassupportforself-dealinginAllyes,yetFMCNdoesnotprovideanswersastowhytwooutsideindividualswereallowedtoearn$20milliononthetransactions.

（1FMCNdidnotrespondtomanyoftheproblemsMuddyWatershighlightedinourreport,includingwhybusinessfriendsofJasonJiangwereallowedtomake5.7xoninvestmentsinAllyes. 

） 

WebelievethatFMCN’simpending“independent”verificationofthenumberofLCDscreensinitsnetworkislikelytobecompromised.Thereisprecedentforthisstatement–FMCN’sauditcommitteepreviouslyundertookaflawedinvestigationintopossibleimproprieties.Aswediscussedinourinitialreport,FMCN’sboard’siscomprisedofindividualswhoarelargelyentangledwithmanagementandwhosecompensationmisalignstheirinterestsfromthoseofshareholders.

WemaintainourStrongSellratingonFMCNmainlybecauseourconcernsregardingtheviabilityofFMCN’scoreLCDcommerciallocationnetworkremain.Thisissue,combinedwithFMCN’sadditionalmisrepresentationsaboutthesizeofthenetwork,FMCN’sopaquebusinessmodel（onboththerevenueandcostsides）,andinsiders’penchantforself-dealing,renderFMCNsharesun-investable.

II.FMCN’sfilingsandMW’sconversationswithFMCNsalesmakeclearthatFMCN’sresponseisdoublecountingdigitalposterframes.Thus,FMCNisstillinflatingthenumberofLCDdisplaysinitscommerciallocationnetworkbyroughly50%.

FMCN’sresponsestatedthatMWmisunderstoodthewaythatFMCNclassifiesitsLCDdisplays,andthatMWexcluded32,478Digital2.0and29,878Digital1.0posterframesfromourcalculationofthesizeofitscommerciallocationnetwork;

and,thatincludingthesedigitalframes,FMCNhas178,382LCDdisplaysinthenetwork.2

However,FMCNalreadycountedthosedigitalframesinthe335,822digitalandtraditionalposterframesitclaimedtohaveasofDecember31,2010.3MWisconfidentthatFMCN’sresponseisdoublecountingthesedigitalframes,andinourconclusionthatFMCNoverstatesthecommerciallocationnetworkbyapproximately50%,because:

FMCN’sfilingsclearlystatethethreemenuitemsthroughwhichitsellsLCDcommerciallocationnetworkadvertising.ThethreemenuitemsarechannelsA1,A2,andtheTravelchannel.PerthemediakitsandconfirmatoryconversationswithFMCNsales,channelA1consistsofapproximately70,000displays.A2consistsofapproximately40,000displays.Travelconsistsofapproximately3,000displays.Thetotalnumberofdisplaysinthesethreechannelsisfewerthan120,000.

ThedigitalframestowhichFMCN’sresponsecountsintheLCDcommercialdisplaynetworkareactuallyseparateanddistinctproducts.FMCN’sfilingsmakeclearthatitcountsdigitalposterframesinitspostersegment.Further,ourFramemediaDigital2.0mediakitlistsapproximately32,000frames,whichisequivalenttothenumberofDigital2.0framesthatFMCN’sresponsestatedarepartofitsLCDdisplaynetwork.OurinteractionswithFMCNsalesmadeclearthatDigital2.0framesareaposterframeproductseparateanddistinctfromtheLCDcommercialdisplaynetwork.

Intuitively,itisclearwhyFMCN（inreality）separatesLCDcommercialdisplaysfromdigitalposters.TheLCDdisplaysegmentallowsadvertiserstoshowfullmotionvideoinfiveto30-secondclips.Digitalpostersshowstaticimagesjustaspaperpostersdo–itdoesnotmatterwhetherthestaticimagesareshownonLCD,LED,plasma,orCRTdisplays.Theydonotofferadvertiserstheabilityto“tellastory”viavideo.Hence,advertisersandFMCNregarddigitalframesasseparatefromLCDdisplays.

（2 

http:

//www.sec.gov/Archives/edgar/data/1330017/000130901411000764/exhibit2.htm

3FMCN201020-F,pp.4-5.）

A.FMCN’sLCDCommercialLocationMenuTotalsFewerthan120,000Displays.

FMCN’sfilingsmakeclearthatitsellsindoorLCDcommercialdisplayadvertisingthroughthreemenuitems（itreferstoitsmenuitemsas“channels”）[emphasisadded]–A1,A2,andTravel:

AsweexpandthenumberofvenuesinourLCDdisplaynetwork,wecontinuetoseparatecertaintypesofvenuesintodistinctstand-alonechannelsofthisnetwork.AsofDecember31,2010,wehadestablishedfoursuchstand-alonechannelsthataremarketedasseparatefocusedchannelsofourLCDdisplaynetwork:

ourpremierofficebuildingAandB,travelandoutdoorLEDbillboard4networkchannels.StartingfromJanuary1,2011,werestructuredourpremierofficebuildingAandBchannelsintopremierofficebuildingA1andA2channelstocreatemorenetworkcapacityresources.5

OneofourconversationswithFMCNsalesconfirmedthatourmediakitscorrectlyshowthatA1hasapproximately70,000displays,A2hasapproximately40,000displays,andthetotalisapproximately110,000displays.Thefollowingisanexcerptoftheconfirmatoryconversation:

6

OurmediakitfortheTravelchannelshowsfewerthan3,000screens,meaningthatthetotalofallthreemenuitemsisfewerthan120,000,versusthe178,382FMCNclaims.TheTravelchanneliscomprisedofLCDsinhotels,airportbuses,airportbathrooms,restaurants,andothertravel-relatedlocations.ThereareTravelchannelscreensin12citiesnationwide,includingallfourTier1cities.（NotethatwearenotincludingthemediakitsbecausewewanttoprotectFMCNsalespeoplefromretribution.7）

（4OutdoorLEDdisplaysarenotinquestion;

therefore,wedonotdiscussthem.FMCN’sresponseisthatindoordigitalposterframescomprisethebalanceofLCDdisplaysinquestion.

5FMCN201020-F,p.40.

6AppendixAprovidesalarger