Seeking Alpha

Tim Chen

 
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  • Demand Media's eHow Slammed Again by Google's Panda 2 [View article]
    I think a much more relevant comparison to eNom is Tucows (ticker TCX on Amex). GoDaddy is an order of magnitude larger than these 2 registrars, and is much more profitable.

    Tucows trades at less than 0.5x sales (~$41m market cap), it did around $85m in revenue in 2010, on which it earned about $2m.

    eNom did around $100m in revenue in 2010, and does not break out income for the segment. If you use Tucows as a comp, eNom is worth less than $1 per share.

    If you think there is a valuation disconnect between GoDaddy (over 30% market share in registrar), and eNom (less than 10% market share in registrar), you're much better off buying Tucows than DMD.
    Aug 6 02:07 PM | Likes Like |Link to Comment
  • Google's Panda Update Likely to Negatively Impact Demand Media [View article]
    Sistrix is now reporting that their eHow USA numbers are down 66%

    www.sistrix.com/blog/9...

    I can't confirm the accuracy of SISTRIX numbers overall, but I'll say that our similar, much smaller scale, proprietary crawl was correlated tightly to our own Google traffic.

    Also, I'd point out that eHow is the only 10%+ revenue contributing web property in Demand Media's portfolio. And one of the biggest runner ups was Answerbag.

    For content sites like ours, organic search traffic to static pages is 100% margin and is the bread and butter of profitability. Other traffic is purchased through a competitive bidding scheme, often to the point where the marginal value of the traffic is nearly 0.

    Therefore, if I were in the shoes of a management team trying to do a secondary offering, I'd try to focus everyone's attention on the relatively small % impact to top line and page views, and give absolutely no color regarding the two things that actually matter: (i) organic search traffic is responsible for the lions share of profit margins at sites that aggregates static content, and (ii) the IRR of all future content creation is greatly impaired in the event of an organic search de-ranking, which will greatly impair any future return on investment in new articles, and make any existing earnings projections irrelevant.
    Apr 16 07:37 PM | Likes Like |Link to Comment
  • Google's Panda Update Likely to Negatively Impact Demand Media [View article]
    Two more items to think about:
    1) Search engine experts are telling websites impacted by Panda to lower their ratio of ads to content, in order to try and recoup traffic. In fact, one of Google's spam team's questionnaire questions, used to check if a site is spammy to a human being, is "Does this site have excessive ads?”

    Given that O&O saw huge increases in monetization per visitor in 2010, it raises the question as to what will happen to monetization per visitor, post-Panda, if one of the paths to salvation is reducing visitor monetization.

    2) One other difference with Panda 2 is that Google is using user-feedback spam flags as an indicator, "in certain high confidence situations." This could be another explanation for Panda missing eHow USA the first go around, but impacting it the second time around.

    This feature was rolled out AFTER Panda 1:
    googleblog.blogspot.co...

    And is being used in "high confidence situations":
    googlewebmastercentral...
    Apr 15 01:55 PM | Likes Like |Link to Comment
  • Google's Panda Update Likely to Negatively Impact Demand Media [View article]
    Chris - that's somewhat ironic. I have submitted a request to editorial to have this updated.
    Apr 14 05:35 PM | Likes Like |Link to Comment
  • Google's Panda Update Likely to Negatively Impact Demand Media [View article]
    The crawl was US based - that's what the sell side is missing right now. For complete transparency, I've posted all the crawl raw data online, comparing my crawl this morning vs my crawl on April 9, 2011.

    While you can't verify April 9 search result data on Google right now, you can definitely verify today's search data.

    www.nerdwallet.com/ehow
    Apr 14 02:31 PM | Likes Like |Link to Comment
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