According to recent news from Reuters, management at Monster Worldwide, Inc. (MWW) might sell a part — or all — of its business.
The news led to a 2.04% jump in share price in regular trading to close at $9.49 on March 22, 2012.
Monster had earlier retained Key Partners LLC and BofA Merrill Lynch as its financial advisors in connection with its review of strategic alternatives done previously.
The company is facing tough times for quite some time now and is considering strategic alternatives to boost shareholder value in the coming months to combat the same. Competition has intensified over the last few years in the online employment advertising market, which in our view has resulted in Monster losing share.
Though Monster once had a dominant position, there are now several national competitors (i.e., CareerBuilder) as well as niche sites (i.e., Dice, JobsintheMoney, TheLadders, SnagAJob, etc.). Many of the cutting-edge recruiters have reduced their use of job boards in favor of alternative social media sites, such as LinkedIn and Twitter.
The near-term priorities for the management includes executing on its share buyback program along with returning excess cash to shareholders, focusing on incremental growth opportunity with SeeMore and Government Solutions and implementing $100 million cost savings initiative to increase marketing campaign and sales efforts.
Along with the fourth quarter earnings released in January, Monster announced a workforce reduction of approximately 400 associates, or 7% of its full-time staff on a global basis, consolidation of certain office facilities along with control in discretionary spending.
Although these efforts will boost the bottom-line, its top-line continues to be a challenge. The slowdown in the economy has adversely affected the company’s business.
Earnings estimates for 2012 and 2013 have declined significantly in the last sixty days. It remains how the management handles the crisis that the company is undergoing. Hence, we maintain a Neutral recommendation on Monster. Our recommendation is supported by Zacks #3 Rank, which translates into a short-term rating of Hold.
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