Recent changes made to Google's Search algorithm to surface higher quality search results have hurt traffic to Demand Media's flagship Web site eHow. The company relies on advertisements on its Web sites for revenue, and largely relies on search traffic to bring people to its Web sites.
Demand Media's fourth-quarter revenue fell 6% from the year-ago period to $96.7 million. The company reported revenue of 3 cents a share for the quarter, down from 12 cents a share in the year-ago period.
TheStreet Ratings team rates DEMAND MEDIA INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate DEMAND MEDIA INC (DMD) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows: