Demand Media Gains After Boosting Annual Profit Forecast

Demand Media Inc. (DMD), operator of eHow.com and domain-name business eNom.com, jumped after the company boosted its annual forecast, citing content improvements.

Demand Media rose 8.1 percent to $8.57 at the close in New York. The Santa Monica, California-based company’s shares are up 29 percent this year.

The company, which said its worldwide unique users exceeded 104 million in March, is working to improve consumer experience on its eHow sites. Changes include removing 600,000 pieces of low quality or similar content and adding more premium text and video, Chief Executive Officer Richard Rosenblatt said yesterday on a conference call.

Mark Mahaney, an analyst at Citigroup Inc. in San Francisco, today upgraded the shares to buy from neutral.

“Demand has become a potentially material play on the growth of online-video due to its YouTube channels,” Mahaney wrote in a note to investors. “eHow appears on a path to sustainable growth.”

Demand Media said it expects annual per share earnings excluding certain items of as much as 35 cents, up from a prior forecast in February of a maximum of 32 cents. That compared to the 28 cent average estimate of analysts in a Bloomberg survey. The company projected revenue of as much as $367 million, compared to its previous prediction of as much as $358 million. Analysts had estimated sales of $341.3 million.

To contact the reporter on this story: Niamh Ring in New York at nring@bloomberg.net

To contact the editor responsible for this story: Cecile Daurat at cdaurat@bloomberg.net

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