From all of us former HotJobs.com people this is a bit of deja vu. Monster held out for 7 years and saved $230 million by doing so. They have the Federal Trade Commission to thank for that. And Yahoo!? Well, they have a nice capital loss write off for 2010.
The deal, which comes as the U.S. unemployment level remains around 10 percent, would take Yahoo out of the online recruitment business, leaving Monster with only one major competitor, Careerbuilder.com.
Monster, which controls about one-third of online jobs postings in the United States, does not expect the deal to raise significant issues with antitrust regulators, since HotJobs has a smaller share of the market.
Careerbuilder, owned by U.S. newspaper publishers Gannett Co Inc (GCI.N), McClatchy Co (MNI.N) and Tribune Co (TRBCQ.PK), as well as software maker Microsoft Corp (MSFT.O), has the largest part of the online job ads market.
It is too soon to say whether Monster will cut jobs as a result of the deal, Chief Executive Sal Iannuzzi told Reuters.
The deal comes as the U.S. economy shows signs of recovering from a protracted slump. The government’s January jobs data due on Friday is expected to show only the second monthly jobs gain since the recession began in 2007, though the unemployment rate is expected to remain above the key 10 percent level.
Monster’s monthly index of online jobs demand weakened in December, suggesting a broad recovery was not yet under way.
Under the terms of the deal, Monster will pay Yahoo $20 million to $31 million a year for Yahoo to redirect traffic to its site.
Monster also will double the number of newspapers that it works with to about 1,000, Iannuzzi said. Monster and HotJobs each have deals with newspaper websites for displaying online job ads.
The HotJobs deal is expected to close in the third quarter. Monster said the deal will be accretive to earnings next year.
HotJobs generates annual revenue of about $100 million. Monster’s 2009 revenue totaled $905 million.
The deal overshadowed Monster’s quarterly results, also released on Wednesday. They largely matched expectations.
Monster’s net loss came to $2.1 million, or 1 cent per share, matching forecasts. Revenue fell 27 percent to $213 million, slightly ahead of Wall Street expectations. Deferred revenue, which Monster will recognize over a long period, rose 15 percent sequentially to $305 million.
Monster shares were trading at $16.50 after hours, up from their closing price of $16.42. Yahoo was up slightly from the close at $15.50.
(Reporting by Nick Zieminski. Editing by Robert MacMillan)