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Investors Take a Bite Out of Monster

Shares of the job listings provider slumped after it trimmed its revenue forecast for the March quarter

Monster Worldwide (MNST) warned investors on Apr. 4 that it won't generate quite as much revenue during the March quarter as initially promised. The New York company, whose job search business is exposed to economic volatility, cited reduced growth rates in its North America careers and Internet advertising and fees businesses.

The parent of the job website said in a statement that its revenue for the first quarter ended Mar. 31 is expected to be in the range of $328 million to $329 million, slightly below its $330 million to $338 million forecast issued on Feb. 1. Meanwhile, the consensus forecast was for $333 million, according to Thomson Financial.

Disappointed investors sold the stock more than 13% to $42.11 in early New York afternoon trading on the Nasdaq.

While Monster's sales are coming in below initial forecasts, they will be up more than 27.6% compared to the same period last year. The company said the increase reflects continued rapid sales growth in its Careers International business.

And it also said Apr. 4 that it continues to expect the same financial results for the full year 2007 that it had forecast on Feb. 1. At the time, Monster projected revenue of $1.36 billion to $1.41 billion for the year. The consensus forecast is $1.4 billion.

Monster has indeed pushed ahead to expand its business globally, and bought companies during recent years such as the South Korean recruitment website JobKorea Co. Ltd. During 2006, the company derived nearly a third of its revenue from international business.

But the all-important North American market, which accounts for nearly 60% of revenue, was rocky during recent months. The Monster Employment Index gained only one point from December to January, then catapulted by nine points to a level of 177 in February.

In response to the company's lower first-quarter revenue forecast, Prudential analyst Steven Barlow trimmed his $1.63 2007 earnings per share estimate to $1.60. He says he doesn't feel economic conditions have changed to warrant today's sell-off in the shares, according to S&P MarketScope. He has a $62 price target, and recommends that investors buy on weakness.

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