Monster Buys Yahoo Job Site

Monster Worldwide announced last Wednesday the agreement to acquire HotJobs, Yahoo’s employment searching website, for $225 million in cash. The deal will exclude Yahoo from the online job-searching industry and leave only two main competitors: Monster and careerbuilder.com

Although HotJobs generates only $100 million revenues compared to Monster’s 2009 revenue of $905 million, Monsters expect to duplicate its distribution channels. Indeed, HotJobs has developed a strong relationship with several newspaper websites and will double the number of newspapers that Monster works with.

Monster's acquisition might respond to a long term strategy of capturing market share with the recovery of the US economy. A high unemployment rate of 10% might be considered as a business opportunity for Monster.com. However, this strategy might be contradictory to its last year’s revenues and profits performance. Monster’s operating margins have been reduced substantially due to high costs associated with expanding to a greater number of markets and geographies. This expansion has increased their cost base.

Additional to the fourth-quarter loss presented by Monster, the market haven’t responded positive to this new potential deal and the stock price of both companies went down sharply. Monster shares went down 31.8% to $12.84 and Yahoo’s stock dropped 18 cents, or 1.2%.

The main reason for a negative respond of the market was that Monster revenues have been declining in 2010 and the market does not expect that the overpaid price for HotJobs will not turn around the company’s poor profits.

http://www.forbes.com/2010/02/04/monster-yahoo-hotjobs-markets-equities-jobs.html