According to a press release, a class action lawfirm, Branham Law, LLP, “announced today it is investigating Demand Media, Inc. (NYSE: DMD) to determine whether it has violated securities laws by issuing false and misleading statements to its shareholders.”
“This investigation is a result of disclosures made about changes to Google’s search engine methodologies that have significantly reduced the references to the Company’s websites. References to the Company’s websites are a substantial source of revenue for DMD.”
“Prior to January 26, 2011, Google announced it was already implementing changes to its search engine methodology that would reduce the number of references to “content farm” websites like those operated by DMD. ”
“The Company generates revenue when a user clicks on one of its highly ranked bits of media from an internet search engine, most often Google, which serves as the Company’s largest referrer.”
“With these changes in search engine methodologies, visits to the Company’s websites have declined along with DMD’s revenues. ”
“Our investigation focuses on whether the Company properly disclosed business risks and other potential problems in the registration statements and prospectus it issued in connection with the Company’s January 26, 2011 Initial Public Offering of DMD common stock.”
Gotta love these security class action firms.
It was clear as day in their S-1: they were heavily dependent on Google and any changes to their search algorithms could have a negative impact on their business.
If anything, I’m impressed with how well DMD has rebounded from the Google changes.
Yup almost always wind up with millions going to the law firm and a coupon for $1 off your next purchase to the injured parties
My favorite was the letter I got about a Verizon Wireless settlement a few weeks ago.
It offered me a calling card for something like 50 minutes of free long distance. (That’s helpful with my unlimited calling plan!)
Meanwhile the lawyers are asking for up to $6 million.
and they probably wanted you to pay like $4,99 for shipping and handling to get the card
I received a $1 and change check related to some class action lawsuit against Google for Adsense practices. While depositing another check I tried to deposit it as well. The machine rejected the check so I suppose I have to make a special trip to the bank during normal bank hours, wait in line and see what the issue is – to receive my $1. I suspect the attorneys made far more for their time than $1 while Google continues to keep 75% of revenue from Adsense clicks.