Monster Worldwide Seeks Sale of ChinaHR in Restructuring
Monster Worldwide Inc. (MWW), the Internet- recruiting service exploring a sale, rose the most in a month after saying it will seek a buyer for its ChinaHR unit and restructure to shed less lucrative businesses.
The company is evaluating “all options” for developing markets and curtailing losses in those regions, New York-based Monster said in a statement today. The shares gained 10 percent to $6.29 at the close in New York, the biggest daily increase since Oct. 8. The stock has declined 21 percent this year.
Monster, which first said in March it was considering a sale, has been trimming its workforce and cutting costs after European economic turmoil caused clients to pare use of its products and companies such as LinkedIn Corp. (LNKD) offer alternative recruitment tools. Additional measures announced today will curb costs by about $130 million a year, Monster said.
“It looks like they’re trying to make it easier for the company to be sold and sell off pieces to make the company more attractive as a whole,” said Eric Handler, an analyst at MKM Partners LLC. “The market remains choppy. They’re doing a good job of taking costs out of the equation.”
Still, the China unit’s growth has slowed since Monster bought its final stake in the company in 2008, said Randle Reece, an analyst at Avondale Partners LLC.
“ChinaHR has lost most of its share of the Chinese online help-wanted market,” said Reece, who is based in Nashville, Tennessee. “Any consideration they receive for disposing of ChinaHR is likely to be insignificant.”
The company bought its initial 40 percent stake in ChineHR in 2005 for $50 million. Monster increased its holdings to 44.4 percent in a $19.9 million transaction in 2006 and then purchased the rest for $174 million two years later.
The price paid for the final 55.6 percent of ChinaHR valued the entire business at $300 million, Reece said in an e-mail. The company wrote down its goodwill by $216 million in the third quarter, which accounts for most of ChinaHR’s $262 million in goodwill, he said. Goodwill is the amount above the fair value of net assets paid for an acquisition.
Monster continues to consider the sale of the whole company, Timothy Yates, executive vice president, told investors and analysts today on a conference call. A “substantial number” of potential buyers have received management presentations, he said.
“The recent uncertainty has resulted in our review of strategic alternatives taking longer than we anticipated,” Yates said. “Some of these discussions are ongoing and we cannot predict the timing or the specifics of the outcome from the process.”
Third-quarter sales fell 11 percent to $221.7 million, missing the $233.9 million average estimate of analysts, according to data compiled by Bloomberg. The net loss was $194.2 million, or $1.75 a share, compared with income of $31.8 million, or 26 cents, a year earlier. Profit excluding some items was 9 cents a share, topping the 5-cent average estimate.
Revenue for the careers North America unit, which made up 47 percent of sales last year, was $115.5 million, a 6.3 percent drop from the previous year. International revenue declined 16 percent to $87.5 million.
Monster forecast fourth-quarter earnings from continuing operations of 5 cents to 10 cents a share. The company expects pretax restructuring expenses of as much as $60 million to be recorded in the current quarter.
In January, Monster said it planned to trim its workforce by about 400 jobs, or 7 percent, according to a statement at the time. Chief Executive Officer Sal Iannuzzi said in March he would consider selling the company as a whole or in parts and hired Stone Key Partners LLC and Bank of America Corp.’s Merrill Lynch to help.
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