While the U.S. business seems to have bottomed out for Monster (NASDAQ:MWW), the international segment is a different story. The company’s third quarter results were not very good. It announced partnerships in Europe and Asia that reduced its stake in the county businesses. The net revenues from career services in international markets dropped by 20% as compared to just 5% decline for North America.  The crux is that Monster is falling behind in its effort to address the $27 billion+ global talent acquisition market where LinkedIn (NASDAQ:LNKD) has set new standards. Employers are increasingly using data to make more informed hiring decisions, and this is where LinkedIn has a huge advantage over Monster. While we expect that the company’s semantic search and cloud based services to differentiate it from its competitors to some extent, global hiring trends dictate that the company is losing its edge.
Our price estimate for Monster stands at $6.50, implying a premium of about 20% to the market price.
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What’s Happening In Overseas Markets?
The decline in international revenues was primarily driven by disappointing results in Europe and India. The sales from Europe fell by almost 24% compared to the third quarter of 2012, due to the persisting weakness in the business in Germany, France, the U.K. and the Netherlands.  India, which is one of the few profitable markets for Monster in Asia, continued to reel under the pressure of global economic uncertainty, registering a revenue decline of 17%. 
While there have been signs of mild economic recovery in the Euro Zone, the job market doesn’t seem to feel it. The European Commission has stated in its latest report that the unemployment levels will remain around 12.2% (record high) for the next two years.  While this implies a higher number of job seekers, it also means a lower number of jobs posted which is how Monster makes most of its money.
Amid these difficulties, the company decided to sell 49% of its stake in JobKorea and is forming a joint venture with Alma Media in Europe. In this venture, Monster will combine its remaining Eastern European businesses including Czech Republic, Hungary and Poland, with Alma Media’s businesses in certain countries and own 15% stake.  Clearly, the company is downsizing its business in international markets which is in stark contrast with what its rival LinkedIn is doing. Monster’s problems are not just driven by the macro economic environment, but are deeply stemmed in its own business model.
Monster Is Falling Behind In Almost Every Comparison
It appears that LinkedIn has surpassed Monster in every aspect, even though the latter has been in the recruitment market for a much longer time. Monster’s quarterly revenues stood at $197 in Q3 2013 as compared to LinkedIn’s $392.9 million.  Additionally, LinkedIn’s monthly user base is growing fast and has surpassed 250 million worldwide. In comparison, Monster has only 200 million members globally with growth rate of just 1 million members per month, which is significantly below the figure for LinkedIn. In the third quarter of 2013, mobile accounted for about 38% of LinkedIn’s unique visitors as compared to 25% for Monster.  Given these metrics, and how recruiters are increasingly preferring LinkedIn, the outlook for Monster looks bleak. Its best bet lies in investing more in North American business which has shown some signs of bottoming out.