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12|23|2010 02:27 pm EDT

Demand Media IPO Stalled

by Frank Michlick in Categories: Up to the Minute

As we had reported earlier this year, Demand Media, parent company of numerous registrars, websites and a domain parking company, was planning to file for an IPO in 2010. According to an article by CNNMoney, the IPO has now stalled due to the regulator’s questions regarding Demand Media’s accounting practices.

The company’s CEO, Richard Rosenblatt has always insisted that the company was profitable, but the IPO filing revealed a different story, showing that the company is in the red for at least for $6 million USD for 2010. One of the reasons the filings are being investigated is that Demand Media expenses the cost of content creation over the course of five years, stating that the average time period this content will generate revenue for is 5.4 years.

[via CNNMoney]

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2 Comments

Joe Davison

December 23, 2010 @ 4:09 pm EDT

I think 5 years is a reasonable estimate, since a lot of their content is generic, timeless ‘how to’ information. It will be interesting to see what the regulators think.

jp

December 26, 2010 @ 11:56 pm EDT

There can be a lot of interestig information in an IPO filing. We learn that for a major player in the space it takes them essentially 5 years to see profits from a minisite (and that’s on their cut of the revenue) so it gives us a little bit of an idea of what we can expect as far as returns from minisites.

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