Look, the credibility of Muddy Waters clearly has deteriorated and now that they have attacked Focus Media I really have serious doubts Muddy Waters has credible information about Chinese companies they cover. I guess Muddy Waters is just taking advantage of the fact that people cannot speak or read Chinese, which means they are not able to verify what Muddy Waters says. This gives Muddy Waters a huge advantage to profit just from fear of others. Remember, there are companies that fell victim of Muddy Waters defamatory "research" but are still in business, doing fine. Unfortunately, their stock prices haven't fully recovered, yet.
UPDATE 1-Focus Media denies Muddy Waters allegations, shares up
* Says allegations concern matters long disclosed in reports
* Co to engage 3rd party firm to audit LCD networks
* Shares up 4 percent in premarket trade
Nov 22 (Reuters) - Chinese digital advertising firm Focus Media Holding Ltd denied allegations by Muddy Waters that it overstated its assets and overpaid for acquisitions, saying the short seller was misrepresenting information.
On Monday, Muddy Waters said Focus Media had inflated the number of its LCD advertising display screens, sending the company's shares down 40 percent and wiping about $1.3 billion of its market value.
"The company maintains that the allegations set forth in the Muddy Waters report concern matters which have long been disclosed in Focus Media's historical annual reports and press releases, misrepresent the information they present," Focus Media said in a statement.
Shanghai-based Focus Media -- which operates advertising screens in offices and apartments, elevators and supermarkets across China -- said the report on the company's LCD screens did not take into account digital screens and LCD picture frame devices.
Focus Media also said it would recommend the audit committee to engage a third-party survey firm to conduct an independent accounting of its LCD screens, poster frame and in-store networks to confirm its claims.
American Depository Receipts (ADRs) of Focus Media were up 4 percent in pre-market trade on Tuesday. They closed at $15.43 on Monday on Nasdaq.
(Reporting by Soham Chatterjee in Bangalore; Editing by Saumyadeb Chakrabarty)