Demand Media’s Quarter Beats Street, Vows to Improve Quality


Demand Media Inc. reported first quarter results that beat Wall Street expectations, and announced changes to its editorial policies in an effort to improve the quality of its how-to articles and videos.

The Santa Monica company, which went public in January, reported a net loss of $5.6 million (13 cents a share), compared with a net loss of $4.1 million (-94 cents) a year earlier. Revenue, excluding traffic acquisition costs, rose 50 percent to $76.3 million, with content and media revenue up 72 percent to $51.9 million.

Adjusted profit was 6 cents per share. Analysts surveyed by Thomson Reuters on average expected adjusted per-share profit of 4 cents on revenue of $69.6 million.

Demand Media said it will remove some stories deemed substandard that were created under a discontinued writers’ compensation system, and is soliciting more experienced writers to contribute with higher pay. It also is upgrading reader feedback tools.

The changes are designed to enable its content to play better on major search engines. Google earlier this year overhauled its search algorithm to improve results and remove poor-quality content, and analysts say that has lowered the exposure of Demand Media’s eHow and other sites.

The company already has worked to raise the cachet of its properties by signing celebrities such as Rachael Ray and Tyra Banks to create and host sites based on their expertise.

“We believe our publishing platform is the most comprehensive and effective of any online publisher and our focus on delivering relevant, valuable content that makes consumers’ lives better will continue to drive our success,” said Chief Executive Richard Rosenblatt in a statement.

The company raised its 2011 revenue forecast, excluding traffic acquisition costs, to $305 million to $315 million. Analysts on average are forecasting less than $308 million.

Shares on Friday closed up 62 cents, or 3.8 percent, to $16.93 on the Nasdaq and were up another 3 percent in after-market trading.

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