Monster Worldwide Advances After CEO’s ‘Strategic’ Comment: New York Mover
Monster Worldwide Inc. (MWW), the online recruiting service, gained the most in six months after Chief Executive Officer Salvatore Iannuzzi said he’s considering “strategic alternatives” to boost investor value.
“Our shareholders deserve a better return,” Iannuzzi said at a Robert W. Baird & Co. conference in Boston.
Monster advanced 15 percent to $8.01 today at the close in New York, the biggest one-day jump since August. The shares have tumbled 52 percent in the past 12 months.
Iannuzzi has already identified cost cuts, an effort to cope with the slow economic recovery and competition from sites such as LinkedIn Corp. (LNKD) that offer cheaper ways to recruit employees. Monster said earlier this year that it would eliminate about 400 jobs, or 7 percent of its workforce, after the European crisis saw users visit the job-search website less.
Aside from the economic challenges, New York-based Monster appears to be performing worse than LinkedIn and CareerBuilder Inc. (CBDR), Mark Mahaney, an analyst at Citigroup Inc. in San Francisco, said in a note to investors last month. “We see this competitive risk increasing,” said Mahaney, who downgraded to stock to a “sell” rating at the time.
Iannuzzi said in January that first-quarter profit would be 4 cents a share at most, missing the 9-cent average analyst estimate. Sales in the fourth quarter fell 2 percent to $250 million from $255.1 million a year earlier.
By contrast, LinkedIn’s fourth-quarter sales more than doubled to $167.7 million from the year earlier.
Possible Takeover Target
Strategic alternatives could include a takeover, Tobey Sommer, an analyst with SunTrust Robinson Humphrey Inc. in Nashville, Tennessee. A buyer could cut marketing expenses, which accounted for 21 percent of Monster’s revenue last year and would benefit from the deal if the U.S. starts adding more lower-paying jobs, such as those in construction, that tend to use the service more, he said.
“If we start to create mid-level and low-level jobs in a more substantial fashion, a lot of those market-share competitive issues will not be a focus,” he said in a telephone interview.
A buyer could pay $11 to $12 a share, though that could increase in a leveraged buyout, he said. Sommer has a $16 price target on the company for 2012.
Others that could benefit from a takeover include “large media companies,” Sommer said. He estimates such an acquirer could reduce Monster’s operating expenses -- $963.6 million last year -- by about $100 million.
Amy Rosenberg, a spokeswoman for Monster, declined to comment on Iannuzzi’s remarks and takeover speculation.