Kara Swisher

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Demand Media 3Q Earnings Call: Variety Is the Spice of eHow

After a quarter of getting its stock beat up for months, Demand Media beat Wall Street expectations in the third quarter.

The stock is now going in the right direction, but can Richard Rosenblatt, the CEO and co-founder of the Santa Monica, Calif.-based social content company keep up the momentum?

Here is his pitch on the conference call, after Demand released its Q3 earnings:

2:04 pm: The really bad wait music is over and the call begins. As usual, investor lady recites the rules.

And then Rosenblatt gets on the call and starts to say how it is all going to be better. For a company that went public in the last year, that’s how the worm does turn.

But he turned in a solid quarter, despite some fallbacks at its flagship eHow site, which apparently lost “variety.”

Variety is the spice of life, so you get the problem. Personally, I love turmeric. It is also good as an anti-inflammatory!

2:16 pm: Rosenblatt moves onto its other sites, like comedy site Cracked.com and also its social media strategy.

It bought RSS Graffiti to help it do so, to deliver a social “interest graph.”

I have no idea what that is, but it sounds good.

He also notices how well its registar business is going, including new domains.

Rosenblatt calls it “another strong quarter,” even though it was not as gangbusters as it needs to be in the future.

But he believes “content is at the center” of growth.

Let’s hope!

2:18 pm: Now to the finance dude, so I zone out, as he simply repeats the Q3 metrics you can read in the press release.

2:23 pm: We just got to the cash flow part, so back to sleep.

(To be fair, this is the CFO’s job, so sorry to the numbers dude that I think this part is dull.)

2:30 pm: Oops, again with something rotten in the state of eHow, which he assures is being fixed.

Now to Q&A: Right to eHow’s technical issue. What up with that?

Also how does removing content improve eHow’s prospects?

Good questions from typically not-good-questioning Wall Street analysts.

Rosenblatt blames it on an engineer who changed some search thing that made Google confused. Fixed the “mistake,” he says.

As to trying to get to the bigger problems of making eHow better, he says, there will be a focus on removing “more shallow content.”

More shallow? I don’t mind eHow, but it is not precisely the Economist.

2:34 pm: Now onto Google and its changes to the search algorithms that have hit Demand and others.

Rosenblatt says that the favoring of fresher content has not impacted eHow, which has a lot of evergreen content.

Another eHow question about making it more social! It’s an important focus, since it is Demand’s big site.

Rachael Ray’s cooking has to get more jiggy with the whole Facebook thang.

Cracked gets some loving, since it is really doing much better on this social stuff that the kids love.

Then again, it is all burp and fart jokes, so eHow cannot really compete.

Oooh, here is a good stat: 30 percent of Demand’s revenue is from Google.

Rut-roh! Not that I don’t trust those guys in Mountain View, Calif., but … I don’t trust those guys in Mountain View.

2:44 pm: These are some fine questions from the analysts, about sell-through and other deets.

Nice work, lapdogs!

I am ignoring this exchange about amortization.

Then a good question about whether eHow is a mature or declining property. What are they putting in the water for the analysts? It’s like OccupyWallStreet took over!

Rosenblatt says eHow is “not declining.”

Demand is “making the choice” about pushing more social and not “giving up on eHow.”

Speaking of giving up, here is one on how to give up sugar from eHow.

(During this call, I am eating my kids’ Halloween candy, which I have hid away from them, due to the sugar.)

eHow, eHow, eHow.

The analysts are sure concerned with eHow.

2:55 pm: My sugar high — dang, I should have given it up per eHow — is wearing off, so I am crashing, but the eHow questions continue.

Finally, a question on mobile. Though everyone has a smartphone these days — or will — the usage is still low for content.

Cracked’s mobile revenue has doubled — though Rosenblatt does not say from what base. Livestrong is also doing well as No. 1 paid app.

One more question and it is about: Drum roll … YouTube!

2:59 pm:

Demand recently got one of those channel deals from the Google-owned video giant.

Google is selling the advertising on that channel and monetization of video is a key forward trend, of course.

Right now, YouTube is a large contributor to video revenue, so more Demand reliance on Google.

(Still, don’t trust ’em!)

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Nobody was excited about paying top dollar for a movie about WikiLeaks. A film about the origins of Pets.com would have done better.

— Gitesh Pandya of BoxOfficeGuru.com comments on the dreadful opening weekend box office numbers for “The Fifth Estate.”