|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | |
AUGUST 21, 2003
By Olga Kharif Who's Afraid of Monster.com? Not the leading job site's rivals, which hope shrinking cash reserves and the severing of ties with AOL and MSN are signs of vulnerability Monster Worldwide (MNST ), best-known for its flagship job site, Monster.com, has suffered along with the economy. Last year, its revenues declined 23%, to $1.1 billion. The outfit, whose businesses apart from the job site include being a traditional headhunter and an online and offline ad agency, swung from a $69 million profit in 2001 to a $535 million loss in 2002 as unemployment climbed and available jobs dwindled. But that may be mild compared with the jolt the company will absorb at the end of this year, when Monster.com will disappear from the screens of its two major sources of visitors -- the America Online service of AOL Time Warner (AOL ) and Microsoft's (MSFT ) MSN network. On Aug. 4, Monster announced that it had decided not to renew the agreements that, since 1999, had made it the exclusive job board for both America Online and MSN. The outfit said it no longer wished -- or needed -- to pay a combined $50 million a year or so for the portals' support, even though those deals had been a key factor in making Monster the world's No. 1 job site. LAST-MINUTE DOUBTS. Sources tell BusinessWeek Online that at the last minute, Monster reconsidered -- and was willing to cough up more than the $30 million a year AOL finally accepted from rival job site CareerBuilder, which also bought the space Monster has been occupying on MSN. However, AOL execs walked away, sources say, because Monster wouldn't post 100% its listings on the Internet service. And Monster had some frustrations of its own, says Michael Sileck, chief financial officer of Monster Worldwide -- primarily what he calls poor branding of its services on the portals. In any case, CareerBuilder was more flexible, agreeing to post all of its listings on AOL, according to industry sources. So Monster and AOL divorced, apparently with little love lost. "I think that they made a terrible mistake, and they're going to pay the price," says Lisa Brown, AOL's president for interactive marketing. What happened at Microsoft is a little harder to fathom: MSN had "a good relationship with Monster," says Lisa Gurry, group product manager for MSN, who claims that separation was a mutual decision. Ending those two partnerships could be a bigger deal for Monster than Wall Street seems to think. After falling 14%, to $22.51, on the day of the announcement, the stock has risen, closing at $26.22 on Aug. 20. Yet investors may not be fully factoring in the potential impact on Monster's market share. Since 2001, Monster's cut of the $880 million online job-search business has slipped from 43.1% to 39.4%, according to Morgan Stanley. And its traffic could fall sharply when the AOL contract expires on Dec. 1, followed by MSN's a month later. While revenues may not decline proportionally with the number of visitors, viewership is a key metric that corporations use to decide which job site they'll use to post jobs. Monster says it plans to spend the money it won't be paying America Online and MSN on other types of online and traditional advertising, and it hopes those efforts will sustain its traffic, says Sileck. TIMELY ATTACK. CareerBuilder and another rival, Yahoo!'s (YHOO ) HotJobs.com, will do their best to make sure that doesn't happen. Both concerns plan major marketing campaigns for later this year, and they do so just when Monster will be most vulnerable. In fact, Monster is barely profitable at the moment, and its cash has dwindled -- from $530 million in 2000, to $183 million a year ago, to $100 million at the end of the second quarter, ended in June, according to its financial statements. And Monster will likely spend more than half of the remaining amount on restructuring its business, estimates Matthew Litfin, an analyst with William Blair & Co. The big beneficiary of all this could be CareerBuilder, which now has just 14.8% of the market in revenues but hopes to double its Web traffic with its new ties to America Online and MSN. Unlike Monster, CareerBuilder will be promoted on all AOL Time Warner properties, including CNN.com, says Matt Ferguson, CareerBuilder's CEO. The privately held outfit will pay handsomely for that, but its owners -- newspaper chains Gannett (GCI ), Tribune Co. (TRB ), and Knight-Ridder (KRI ) -- have deep pockets, plus a desire to grab the online job market no matter what.
BW MALL
SPONSORED LINKS
Buy a link now! | | |
 Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Policy |
Printer-Friendly Version
