Consumer Internet companies have seen some excitement recently, with Monster buying HotJobs from Yahoo! I would have liked to see the reverse happen, but Yahoo!’s strategy defies logic as far as I am concerned. Anyway, let’s take a closer look.
Monster (NYSE:MWW) acquired Yahoo!’s HotJobs last quarter for $225 million in cash. A year ago HotJobs had averaged 12.6 million unique monthly visitors, and analysts peg 2009 revenues to be nearly $900 million. The acquisition will help to strengthen Monster’s reach in building strategic relationships in the media segment. HotJobs’s network has 600 daily and weekly newspapers. Monster is looking at broadening the reach anticipated for recruitment advertising through these additional media alliances and reseller agreements. Following the acquisition, Monster will be able to boast of a network of nearly 1,000 newspapers, giving it access to all 50 U.S. states. Also, through the online and print classified ads that come with the newspaper alliances, Monster will be able to further its strategy of connecting job seekers with local businesses in healthcare, education, and skilled and hourly job categories.
Additionally, Monster entered into a three-year commercial traffic agreement with Yahoo!. As part of the traffic agreement, Monster will become Yahoo!’s provider of career and job content on Yahoo’s U.S. and Canadian homepage.
As the economy improves, the job market is beginning to warm up. After having recorded over 8 million lay-offs last year, corporate America is getting back into the hiring mode. The recently released February employment index by Monster reported a surge in increase in recruitment. The Employment Index rose 10 points in February to 124 driven by growth in the manufacturing, transportation, and wholesale trade sectors. Year-on-year, the index reported 2% growth with online demand rising above year-earlier levels. Amid such positive trends, the leading online recruiter, Monster (MWW), should have a better season.
Monster recently reported that Q4 revenue fell 27% over the year to $213.1 million. Sequentially too, revenue was down $1 million. The company reported a loss of $0.02 per share compared with the previous year’s profit of $0.24 per share. For the full year, they reported 33% lower revenues of $905 million and EPS of $0.16. A year ago, they earned $1.04 per share.
Careers revenues fell 30% to $179 million. North America contributed $91 million compared with $135 million earned a year ago. International revenues of $88 million fell 28% over the year. Internet Advertising & Fees grew marginally to $34 million from $33 million earned a year ago.
The stock is currently trading at $16.96 with a market capitalization of $2.1 billion. It had touched a 52-week high of $19.28 in September of last year. Yahoo! should have bought Monster, instead of selling HotJobs, but now that Monster has consolidated HotJobs, it should keep going, and assemble other pieces like freelance marketplaces eLance, oDesk , and Guru, perhaps a job search engine such as Indeed or SimplyHired, and a professional networking site such as LinkedIn. There are other niche jobs portals such as TheLadders that focus on $100k+ jobs, which would also be good acquisition targets for a broad-based roll-up in the jobs business. Note that of these targets, LinkedIn will be the hardest one for Monster to get its hands on because it has credible IPO ambitions of its own and is generally doing quite well.
Once that roll-up is finished, I would love to see Yahoo! buy the consolidated company, since there will be an enormous monetization opportunity for the latter in this segment.
Shutterfly (NASDAQ:SFLY), the online photo sharing company, had an impressive Q4 performance. Net revenues grew 22% over the year to $131.1 million driven by growth in personalized products and services revenues. Personalized products and services revenues grew 29% to $93.2 million and print revenues grew 4% over the year to $36.6 million. Referral fee revenues, however, slipped 8% over the year to $2.5 million. EPS of $0.88 was also higher than previous year’s $0.56. Analysts were expecting revenues of $113.8 million and EPS of $0.70.
For fiscal 2009, Shutterfly reported revenue growth of 15% to $246.4 million and EPS of $0.22 compared with $0.14 a year ago.
In other metrics, total number of customers grew 18% sequentially to 1.9 million. The number of orders generated also rose 12% over the year to 3.1 million in the quarter. The average order value grew 8% over the year to $42.40.
Through its earlier acquisition of Tiny Pictures, the company is tapping into the potential of letting consumers express themselves on social networks and mobile devices. Shutterfly recently launched Wink, which is an iPhone and a Web application that lets users turn their pictures into photo booth-like strips. They application allows easy access to both Facebook and Flickr pictures. Not only can users get printed photo strips delivered to them or their friends, but they can also share these strips on Facebook and Twitter.
Shutterfly expects revenues to be $40 million-$42 million with a loss of $0.12 -$0.15 per share. For fiscal 2010, they expect revenues of $267 million-$277 million with EPS of $0.61-$0.74. Analysts were projecting Q1 revenues of $39.5 million and a loss of $0.16 per share. For the year, analysts were expecting revenues of $252.2 million with EPS of $0.15.
The stock is trading at $24.07 taking its market capitalization to $626 million. Last week it touched a new 52-week high of $24.41.
This is another company that I have long felt that Yahoo! should buy to help monetize its Flickr asset better. As a shareholder, I am happy to see them perform well.
MercadoLibre’s (NASDAQ:MELI) Q4 results missed analyst expectations. Revenues grew 47% to $49 million but were short of analysts’ $59.2 million forecast. EPS of $0.26 was higher than previous year’s $0.18 cents but fell a penny short of the market’s expectations. For the fiscal 2009, revenues grew 26% to $172.8 million and EPS grew 77% to $33.2 million.
By segment, for the quarter, Marketplace revenues grew 31% over the year to $34.1 million and online payments revenues grew 101% to $14.9 million. During the quarter, items sold grew 47.3% to 8.6 million. Gross merchandise volume grew 50.3% over the year to $786.9 million and total payments transactions grew 107.7% to 1.0 million. Total payments volume also increased 145.7% to $135.8 million during the quarter.
The company was greatly impacted by the devaluation of the Venezuelan currency. Excluding the exchange impact, revenues would have been $56 million.
MercadoLibre is continuing to expand in Latin America and recently launched its platform in Portugal. Portugal offers a huge opportunity for MercadoLibre because 46% of its population, approximately 10.6 million people, have residential broadband Internet access. The country’s movement towards e-commerce can be also gauged from the fact that e-commerce companies there reported nearly 20% growth in the number of clients that made purchases over the Internet in the December quarter last year.
Spain is another region that MercadoLibre should look at in the coming years. With over 28.6 million Internet subscribers as of March 2009, and 72% penetration, Spain had the fifth-largest broadband enabled population in Europe. Broadband penetration remains low at just over 8 million subscribers, primarily due to higher cost of connections. However, as costs drop, penetration will rise. Mercado already has an existing Spanish-language portal that could work well in the region. Additionally, the portal could be customized to address the estimated 47 million strong Hispanic population in the United States. Representing 15% of the U.S. population, that market too has huge potential.
MercadoLibre’s stock is trading at $46.90 with a market capitalization of just over $2 billion. In December last year, it had touched 52-week high of $55.75.
It is not inconceivable that MercadoLibre would become an acquisition target for either Amazon or eBay in the near term.