Recruitment solutions provider, Monster Worldwide (NYSE:MWW) will report its FY 2012 earnings on February 7. The company’s revenues from the first three quarters of the year has dropped 10% y-o-y to $682 million. While all the segments registered a decline in revenues, the decline was particularly steep for the Internet advertising and fee segment at 32% y-o-y. Revenues from career services’ divisions of North America and international regions, dropped 3% and 6% respectively during the period. We will look for the performance of the Internet advertising business, which relies heavily on U.S. for its revenues. The temporary workers hiring season during the fourth quarter leads us to expect that the segment will perform better than the trend in the first half of the year.
Monster is pursuing a business restructuring to increase its focus on core competencies and reduce cost structure. As part of the restructuring, it reclassified the ChinaHR business as an asset for sale during the Q3 earnings conference call. We will look for any news regarding the progress on the sale in the Q4 earnings call, and on its plans to combat the effects of economic slowdown in Europe and Asia-Pacific. We are also interested in how the company plans to drive back job listing to its portals, from social media companies like LinkedIn (NYSE:LNKD) and Facebook (NASDAQ:FB) that are becoming alternative venues to job searchers.
Macroeconomic Conditions In 2012 Don’t Inspire Confidence
The U.S. added about 181,000 jobs per month or 2.1 million jobs in 2012.  This figure is similar to the one for 2011. With the Euro-zone countries still unable grapple with their problems, the job markets are still slow as evident from the Monster Employment Indexes for the European region and individual European countries.   The slowdown, a result of the spreading contagion from Europe and a number of domestic factors is expected to have a negative or zero impact on the number of job listing. These considerations lead us to conclude that Monster’s North American and international career services businesses will remain largely flat or show a marginal decline. We would like to hear whether or not Monster’s management shares this outlook.
The Search For Strategic Alternatives
Monster has been looking at strategic alternatives, including selling a part of, or the whole of its business to maximize shareholder’s returns. Stone Key and Bank of America Merrill Lynch have been assisting the company as financial advisers since February as it reportedly seeks offers of more than $10 a share. 
Over the past year multiple firms such as TPG Capital, Apollo Global Management LLC, Bain Capital LLC and Onex Corp. have passed on the offer.  As part of its restructuring, the company decided to pursue a sale of ChinaHR and reclassified it as an asset for sale during the Q3 earnings. Recent news suggests that MyJob has shown interest in buying ChinaHR.  MyJob is a recruitment website in China which belongs to the Irish online job information platform Saon Group. We will look for any leads on the sale of ChinaHR during the earnings call, as well as any other initiatives planned under the restructuring exercise.
- Decoding Monster’s $3.40 Acquisition Price: Is A Failed Turnaround Implied In The Price?
- Monster’s Revenue, EPS Misses Estimates Amidst Acquisition News
- What To Expect From Monster’s Q2 Results
- How Important Is North America For Monster Worldwide?
- Why We Revised Our Price Estimate For Monster By 20%
- Monster’s Stock Drops Over Disappointing Q1 Results, Q2 Guidance
We have a $7.50 Trefis price estimate for Monster, which stands around 30% above its current market price.Notes:
- Employment Situation Summary, Department of Labor, February 2013 [↩]
- Monster Employment Index Europe Declines 4% Year-Over-Year, Yahoo, December 2012 [↩]
- Euro zone falls into second recession since 2009, Reuters, November 2012 [↩]
- Monster soars as CEO mulls “strategic alternatives”, Reuters, March 2013 [↩]
- Monster Said to Find No Bidders So Far, Bloomberg, November 2012 [↩]
- Myjob may bid for ChinaHR.com, People’s Daily Online, February 2013 [↩]