Monster Misses Expectations - Analyst Blog

Monster Worldwide, Inc. (MWW), the parent company of Monster.com, reported revenues of $255 million, up 19.7% from the year-ago quarter and up 11.4% sequentially, but missed the Zacks Consensus Estimate of $264 million. The reported figure includes a $3.3 million purchase accounting adjustment related to the HotJobs acquisition.

Excluding the purchase accounting adjustment, Monster generated revenues of $258 million, up 21% year over year. Currency translation had a $3 million negative impact on revenue in the fourth quarter.

Bookings (which represent the dollar value of contractual orders received) increased 28% year over year to $330 million. Management stated that a number of other factors made the company lose $5 million in bookings leading to the revenue miss.

Monster completed the acquisition of HotJobs from Yahoo! Inc. (YHOO) in August 2010. The other factors included inclement weather in Europe and Northeastern United States impacting business. Also, as the U.S. government did not approve the budget, a number of governmental contracts were not consummated. Some of those contracts were pushed to the future quarters while some of the short-term contracts were lost.

Careers revenue came in at $226 million, up 26% year over year. North America generated revenues of $124 million, up 37% year over year. Careers-International revenue increased 15% to $102 million. Internet Advertising & Fees revenue of $32 million was down 4% year over year.

The company's new service offerings -- Power Resume Search (PRS) and Career Ad Network -- continue to gain traction. PRS has already been launched in America and United Kingdom. In 2011, Monster plans to launch PRS in other countries around the world.

Margins: Excluding one-time items, operating margin came in at 4.6%, up from 2.4% in the previous quarter. Operating expenses grew 16% year over year primarily reflecting the inclusion of HotJob's expenses.

Monster reported breakeven earnings in the quarter compared to a net loss of $2 million or 2 cents per share in the year-ago quarter and a net loss of $5.7 million or 5 cents per share in the previous quarter.

Excluding special items, Monster posted a net income of $7.0 million or 6 cents per share, in line with the Zacks Consensus Estimate.

As of December 31, 2010, deferred revenue was $376 million, up 20% sequentially and up 23% year over year. Excluding the contribution from HotJobs, the deferred revenue balance was $299 million, up from $280 million reported at the end of the previous quarter. Monster expects that deferred revenue will be significantly higher at year-end.

Deferred revenue was $376 million, a 20% sequential increase and a 23% increase compared to last year's numbers.

For 2010, Monster reported revenues of $914 million, up 0.1% year over year. Excluding purchase accounting adjustments, revenues came in at $919 million. Monster reported a net loss of $32 million or 27 cents per share compared to a net income of $19 million or 16 cents per share.

Guidance: Management stated that the macro environment is very uncertain and unemployment continues to be significantly high. However, management stated that clients around the world have increased budgets for recruiting and are beginning to increase their hiring.

Going forward, Monster expects that bookings will grow between 20% and 25% to $1,191 million – $ 1,241 million in 2011. Revenues are projected at $1,103 million – $1,149 million in 2011, up 20% – 25% year over year. Earnings per share are forecasted in the range 36 cent to 48 cents.

For the first quarter, Monster expects bookings between $259 million and $269 million, up 18% – 23% year over year. Revenues are projected between $254 million and $265 million, up 18% – 23% year over year, below the Zacks Consensus Estimate is $270 million. Earnings per share are forecasted in the range 1 cent to 4 cents.

Monster forecasts $30 million of one-time acquisition and integration costs related to HotJobs and it has incurred $24 million of the estimated $30 million and expects to incur the major chunk of the remaining in the first quarter.

 
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