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Monster Posts Sale Signs as Numbers Continue to Tumble

Assault from niche boards and social sites are gobbling up bigger bites of the once-mighty job board industry.

May 17, 2012

Monster Worldwide Inc. chairman Sal Iannuzzi's announcement two months ago that the leading job board company was essentially putting itself up for sale is generating buyer interest.

During the past two weeks, Monster has attracted several would-be suitors, among them private equity firm Silver Lake Partners, according to published reports based on information from unnamed sources close to the company. One of those suitors was LinkedIn, which gave the Maynard, Massachusetts, company a once-over but passed on making an offer, according to Reuters.

In a quarterly earnings call late in April, Iannuzzi didn't directly address the sale, which he retained Stone Key Partners and Bank of America Merrill Lynch to explore, along with other strategic alternatives.

But in a recent Wall Street Journal interview, Iannuzzi said the company, which runs the Monster.com and Hotjobs.com job boards and supplies back-end technology for job boards on partner sites such as Wired.com, is stronger than it has been in seven or eight years. The stock price just doesn't show it. "I owe it as part of my fiduciary responsibility to increase shareholder value any way that I can. And that's what the process is all about, and we'll see where it goes. Right now it's progressing."

The developments have industry watchers guessing who other potential suitors could be. In a Workforce Management interview before word of LinkedIn's interest surfaced, job board industry veteran Jeff Dickey-Chasins said it wouldn't surprise him if the business network or a job board competitor such as CareerBuilder made a bid. Given how much publicly traded job board companies' values have decreased recently, LinkedIn and other competitors could simply stay on the sidelines, and "Monster will become less of a threat," he says.

Like other job board vendors, Monster has been hurt by companies' growing reliance on alternatives such as social networks for recruiting. The situation has been aggravated by continued downward price pressure on the fees companies pay for job listings as well as competition from aggregators such as Indeed and Simply Hired, niche players like Dice.com and enhancements companies are making to their own career websites.

And while the U.S. job market appears to be on the slow road to recovery, lingering economic woes in Europe that have pushed unemployment there to all-time highs, which has hurt bookings, Iannuzzi said in the April 26 earnings call.

Add up all that and the results have hammered Monster's market capitalization, which has plummeted to $1.05 billion in recent weeks from $7.5 billion in 2006.

In an effort to shore up its business, Monster has acted to reduce operating costs, laying off 400 people in January or about 7 percent of its worldwide workforce. The company is also pushing licensing of the semantic search technology that powers its job boards and a newer cloud-based search system called SeeMore. In February, Monster struck its largest non-U.S. deal ever to sell its recruiting technology to the United Kingdom's Department for Work and Pensions, a British government labor and pensions agency that serves 20 million people.

Monster also has thrown its weight behind BeKnown, an application that job hunters can use to create a LinkedIn-style business network on top of their Facebook accounts. Since its debut in June 2011, BeKnown has picked up 180,000 monthly users, according to Facebook data. But that's a drop in the bucket compared with BranchOut, a similar career app that has been out longer and has 11.9 million monthly users, according to Facebook. Monster is expected to make a "global news announcement" related to BeKnown on or before May 21, according to a company spokeswoman.

Whether Monster can stay relevant in the long run by licensing search technology, expanding into Facebook apps and taking other steps is widely debated. Skeptics have given up the job board industry for dead. Despite the deals and initiatives, Monster's sales for the first quarter ended March 31 dropped 5.9 percent to $246.1 million, and the company warned that second quarter bookings could drop as much as 5 percent and revenue as much as 8 percent from a year ago.

For all the talk of job boards' imminent demise, though, recent polls show that they still comprise a large portion of companies' recruiting efforts, inside and outside the United States.

In 2011, job boards accounted for 20.1 percent of companies' new hires, second only to employee referrals (28 percent), according to a February survey from staffing consultant CareerXroads. Both outperformed all other staffing sources, including corporate career sites (9.8 percent), recruiters (9.1 percent) and social media (3.5 percent). "Everyone claims they're disappearing, but companies still post jobs, and job seekers still apply through job boards," says Mark Mehler, CareerXroads co-founder and chief strategist.

Job board operators that Dickey-Chasins polled in his annual job board industry survey in March are most concerned about competition from LinkedIn, niche boards and aggregators.

But 83 percent of the 194 primarily niche job boards polled were either "very" or "somewhat" optimistic about their business this year, says Dickey-Chasins, a consultant with the Job Board Doctor. "Almost uniformly, my clients and other job boards have seen big jumps in business over the past 12 months," he says. "A lot of them are saying 2012 is going to be the best year they've had since the mid-2000s."

Michelle V. Rafter is a Workforce Management contributing editor. Comment below or email editors@workforce.com.