Monster’s Destiny

When The New York Times entered into a deal with Monster Worldwide this February to display Monster’s job ads in NYT’s career sites, it became yet another example of how vertical portals like Monster’s job-related one has come to prominence. [We have recently covered the Online Jobs vertical in detail.]

Prior to the NYT deal, Monster had entered into alliances last year with dozens of newspapers across the US and at least 8 TV stations. The NYT deal saw Monster scaling a 52-week high of 54.67 on Feb 16 on the back of total trade of 5.64mn shares. The stock has since retracted around 24% and now trades at 41.47 (July 2).

Like many successful online ventures that debuted at the start of the dotcom era, Monster began its journey in April 1994 as just the 454th website. There are many firsts to its name: the first public job search engine on Internet, the first to provide online job alerts that is now an industry standard, and the first in the world to have a public resume database.

Founded in 1994 by Jeff Taylor, who remained the CEO and ‘Chief Monster’ for many years before leaving in August 2005 to found Eons, a social website for babyboomers, Monster is today the only pan-European job-search site, and also growing fast in India.

Since touching the February high Monster has been shedding price constantly on NASDAQ, which analysts feel may be because of uninspiring June-Quarter result. Early last month’s unexpected shakeup at the top with the appointment of new CFO Tim Yates may have contributed to the sentiment.

In its analysis, Citigroup points out that in the June-quarter, MNST’s QTD Year-on-Year job postings growth is only modestly ahead in US (15% QTD Y/Y versus 14% last year).

US may no longer be the large growth market Monster will be seeking to expand in. The key therefore lies in establishing footprints in nearly every geo-location. This Monster is already doing, for Citigroup reckons it is at #1 or #2 wherever it exists.

According to Citi, the present downturn notwithstanding, Monster is a good long-term investment. It hopes the company would post strong EPS growth leveraging opportunity in Europe. And yes there is greater likelihood of share buyback.

The real possibility that looms in the horizon for Monster, however, is of a takeover. As I have written before, every major Internet company needs to have a strong vertical play in the large categories : Jobs, Real Estate, Travel, Finance, Photo, etc. Thus companies like News Corp. and IAC who don’t have a position in Online Jobs are likely to acquire Monster in the foreseeable future. Also, given the state of the Newspaper industry which is steadily losing its vertical classifieds business to Online, there may be other potential acquirers.