Demand Media, whose had a public offering in January, has seen its shares cut by half. Rrather than dedicate the proceeds of the stock offering to fixing the company’s challenged business model, its board has decided to use a third of it to repurchase stock. This act directly contravenes the promises DMD made to prospective investors when it sold shares at $17 each seven months ago. Demand Media said the $71 million it was raising in its offering was pegged for “investments in content, international expansion, working capital, product development, sales and marketing activities, general and administrative matters and capital expenditures.”

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