Can Monster Overcome Its Challenges?

by Trefis Team
Rate   |   votes   |   Share

Quick Take

  • Monster’s job listings business continues to face pressure due to increasing competition and weakness in Europe’s economy.
  • Corporates, recruitment professionals and job seekers are increasingly using social networks for hiring purposes.
  • As a result, Monster is exiting from some unprofitable markets and is looking at restructuring its business to appease investors.
  • The company’s investment in better resume search technology might help to some extent, but the biggest help will come from possible increase in hiring activity in the next two years.
  • Monster’s business model is getting outdated and the company may ultimately need to transform itself along the lines of LinkedIn.

Although the last quarter showed some signs of a revival in North America, Monster (NYSE:MWW) has been struggling with the overall growth of its business for a long time. The company’s revenues were down 9% in Q1 2013, compared to the same quarter a year ago as its international business continued to underperform. Monster attributes this weak performance to uncertain global economic environment which is negatively impacting the demand for its services. While there is merit to this statement, increased competition is playing a critical role in making life difficult for the company. Monster is now looking at restructuring initiatives and plans to exit unprofitable markets of Latin America and Turkey. While these steps may temper the losses in the near term, they can also be interpreted as evidence of weakness in Monster’s core business. Let’s take a look at some of the issues that the company is facing and whether there are any catalysts that can change that.

See our complete analysis for Monster

Competition Is Making Monster Obsolete

Monster is facing tough competition from LinkedIn (NYSE:LNKD) in particular. Many LinkedIn members are employed and are known as “passive candidates”, the kind of candidates recruiters covet since conventional wisdom is that the best people already have jobs. Monster does not have a similar network, as attracts candidates when they are either unemployed or are considering changing their job. In essence, the company’s business model is getting outdated and the recruitment industry is rapidly expanding beyond traditional job boards. Monster will need to come up with technology that can better match recruiters and headhunters with their target professionals.

International Business Continues To Decline

In Q1 2013, revenues from Monster’s international operations were down 18%, primarily due to the weak economic situation in Europe. Germany, France, the UK, the Netherlands and Sweden – all contributed to the revenue decline. However, there is a chance that the ongoing wide-scale launch of SeeMore (a semantic search and analytics recruiting platform) and Power Resume Search (an advanced way to rank job candidates using Monster’s 6 Sense technology) in more European countries may help mitigate this slowdown.

The company also saw its revenues from the Asia-Pacific region fall by 10% last quarter as its operations suffered in India and Korea, which had been doing reasonably well so far. Monster estimates that the slowdown in Asia-Pacific reflects the slowdown in global trade and expects the situation to improve as the global economy picks up pace. Since the operating costs haven’t changed much, margins are taking a hit as revenues continue to decline.

Can Improving Job Market Improve The Situation For Monster?

The U.S. added 1.8 million jobs in 2012, which is similar to the figure for 2011.  With the Federal Reserve looking to keep interest rates low till unemployment rate falls to about 6.5%, we expect the growth to pick up in the next couple of years. For the unemployment rate to drop to 6.5% from the current levels, it would require approximately 2 million jobs, or roughly what has been created annually for the past two years. [1] But the difference becomes more imposing if population growth is factored in. CNN Money estimates that 3.2 million jobs need to be added in 2013 for the U.S. unemployment rate to be at ~6.5% in January 2014. Hence, we expect the growth to be spread over the next two years.

The mitigation of policy uncertainties could translate into a spurt in hiring activities going forward. The first signs of an improvement were witnessed in the Bureau of Labor Statistics’s January Employment Situation Summary. The bureau reported an increase by 157,000 in total non-farm payroll employment. Though the number isn’t large and as a result did not impact the unemployment rate, the distribution of the growth in various sectors looks promising. Particularly interesting was the growth witnessed in retail trade and wholesale trade sectors even after the end of holiday season.

An improvement in employment scenario presents upside for both Monster and its competitors. We expect that Monster’s semantic search and cloud based services will differentiate it from social media alternatives such as LinkedIn and Facebook, and help it capture a healthy share of the job listings resulting from the improving employment scenario.

Our price estimate for Monster stands at $5.84, implying a premium of about 10% to the market price.

Understand What Drives a Stock at Trefis

  1. How to get to 6.5% unemployment, CNN Money, January 201 []
Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Monster Logo
  • commented 3 years ago
  • tags: LNKD FB MWW
  • Fast fact: 82% of resumes are summarily rejected, even if you qualify for the job. While the reasons are many, the very first reason is this: the visuals are all wrong. No one will tell you that your resume is ugly. But if your resume is an assault on one's vision the moment they open the file, they simply will move on to the next person. Too many instances of that, and your job search ends up being a long, frustrating endeavor.
    Before delving into the specific instances of ugliness and their corresponding 1-minute makeovers, I'll emphasize that even the prettiest resume in the world, if founded on poor content, will still fail. The makeovers below are best applied when your content, experience, and achievements are strong, in order to visually engage the reader. All that said, let's avoid the three ugly resume moves that are holding you back.
    1) The Structure Is Strange: This happens when jobseekers strive to make their resumes look like they're not cookie-cutter. While seeking uniqueness in your presentation is a worthy endeavor, avoid going overboard. An overabundance of design elements – multiple bullets, multiple shades of gray, tabs to the middle of the page, and tables with no real purpose, all add up to look like a circus.

    1-Minute Makeover: Select two or three design elements, and use those either once or repeatedly. For example, use one style of bullets. Those can be in the expertise section at the top of your resume, and again in your experience section to highlight your achievements. Or, use one element of gray shading. That can be applied to your name and to every heading on the resume.
    2) The Font Is Funny: Certain font choices do not promote reader engagement. Utilizing multiple or different color fonts breaks up the reader's rhythm – and not in a good, attention-getting way – just in an ugly way. Particularly for candidates at the six-figure level, there should be no reason to rely on visual gimmicks such as this to hold the reader's attention.
    1-Minute Makeover: Choose one font that you find appealing, then vary it throughout your resume. For example, your name can be in all caps. The headings can be in small caps. The body can be in standard font. The company descriptions can be in italics. Additionally, restrict your choice of font color to basic black.
    3) The Readability Is Rough: Experienced professionals typically have extensive history to present – ten years or more. However, just as in real estate the mantra is, "location, location, location," in resume writing, the mantra is, "white space, white space, white space." A resume without white space is just plain ugly. Furthermore, it hampers readability when the content is crammed onto the page.
    1-Minute Makeover: Equalize your margins on all four sides of the page. Minimum should be ½", standard is ¾", and margins should be no more than 1". In the body of your resume, skip lines and be consistent about it. For example, if you skip a line between the employer's company name and your title, do so every time. Another visual enhancement is to use the paragraph spacing before and after feature in Microsoft Word to add space in between bulleted items.
    These 1-minute makeovers can do wonders for a resume that offers strong content but weak visuals. Keep the structure, font, and readability standard, then be creative and innovative in your content. That's how to escape the resume ugliness and put forth a beautiful presentation that captures the right attention.
    So create your account