FMCN ER Review

Posted Q1 revenue 58.1 million, up 75% from 33.1 million a year ago. Net profit 16.3 million (73.4% increase), 15c/share(50% increase, shares dilluted), compared with 9.4 million, 10c/share year ago. Excluding one-time items, profit would have been 22.7 million, or 21c/share.
Analysts' forecasts were 14c/share. Excluding stock option expenses and one-time items, analysts had predicted 19c/share (18c to 20c).
(note: This is the fifth time in a row that FMCN has beaten estimates. Stock option expenses are hei ah, eat one more penny per share than estimated ah)

Outlook:
Expects revenue for the Q2 in a range from $103 million to $107 million, excluding $9 million in sales taxes. Analysts were looking for revenue of $90.3 million, on average, with forecasts ranging from $77.0 million to $97.9 million.
Q2 net income, excluding stock-option expenses and one-time items, is expected to range from $40 million and $41 million, or 34 cents to 35 cents per fully diluted ADS. Analysts were looking for 34 cents per share (yahoo finance polled 0.30 to 0.35).

The CC had lots of questions. Most of them were well answered. I am pleased to hear that they are very confident about being the profit leader in the industry. Their old core business (commercial location network) is dominating the market, which is where the seanonality comes from according to them. The newly expanded areas have lower profit margin but still "envied" by the competitors in the segments. That is why the overall gross margin (28%) actually goes down a little bit compared with last year (28.4%). And they stressed this. They are having good business synergy with the newly acquired Allyes.
The last question in the CC was tough. Analyst questioned whether this q1 is more seasonal than q1 2006 since he sees the drop in plots sold q2q this year than q2q last year even with the discount pricing, and whether the "demand was really as strong as we were guided to expect it to be?" The company seemed to be annoyed and the reply was not as professional as I would like to hear. "I don't know where you are trying to get at in your analysis." What?? You'd better figure out.

Overall, a good quarter and good forecast. If not for OE, I think the stock should go up >3%. But with OE, I am not sure.