My Take on the Monster / HotJobs deal

I don’t like the Monster’s just announced acquisition of HotJobs from Yahoo

The Street doesn’t like the deal- Monster stock was down 20% following the news.

Monster overpaid- Although they did not disclose HotJobs revenue, it is widely believed that Monster paid up to get the deal done. According to insiders with first-hand knowledge, Yahoo did not actively seek private equity bids for HotJobs because they believed they could get a better price from Monster. They’re almost certainly right.

Many of the employer customer and job seekers use both Monster and HotJobs. In other words, don’t think that 2+2 will equal 4 in this case. It’s probably more like 2.5 or 3.

Monster’s cash position is dwindling and could become precarious if a recovery doesn’t come soon and the company doesn’t start generating cash.

The deal may lead to increased traffic from Yahoo! but Yahoo! wasn’t a great producer of traffic for HotJobs. If they can’t/won’t produce traffic for an internally owned property, why is this going to work for a partner?

The deal doesn’t solve Monster’s issues. Monster faces dramatically increased competition from many places. The dollars spent on recruiting is not growing, so these competitors are eating into Monster’s (and CareerBuilder’s) core business.

  • Craigslist has decimated Monster’s “single job posting” business, most of which comes from SMBs. This deal doesn’t solve that entirely, although the addition of HotJob’s media partners could help that somewhat. Many SMBs still use newspaper classifieds for hiring because of entrenched relationships. However, the core problem is the fact that Craigslist is almost free or free, and Monster costs $400.
  • Social media- Monster doesn’t really have an answer to social media recruiting, most importantly LinkedIn. LinkedIn will do (reported) $200 million in revenue this year, most of it in recruiting. That is starting to get close to Monster’s $400 million domestic revenue run rate
  • Niche job boards- The web has become a collection of “individualized” media properties. In much the same way, niche job boards serve niche audiences very well. There are very good niche boards in high tech, health care, finance, sales, media, etc. In addition, many high traffic blogs with specific demographic audiences now offer job board functionality (like MediaBistro, for example)
  • Aggregators- Indeed and SimplyHired collect virtually all the jobs in one place, making it MUCH easier for job seekers.

Conclusion: While consolidation is probably a good thing in this fragmented industry, acquiring HotJobs just gets Monster more of what it already had. It’s only slightly additive and it doesn’t advance Monster’s strategic needs or defend Monster’s exposed flank.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: