Monster to Cut 800 Jobs; 2nd-Quarter Profit Drops

Monster Worldwide Inc., the world's largest network of online job-hunting sites, said it will cut 800 jobs, or 15 percent of its staff, after reporting that second-quarter profit fell. The shares rose 6 percent.

Net income slid 28 percent to $28.6 million, or 21 cents a share, from $39.6 million, or 30 cents, a year earlier, the New York-based company said today in a statement. Sales rose 20 percent to $331.1 million, missing the $337 million average estimate of 15 analysts.

Monster expects the job cuts to save as much as $170 million a year. The company will spend up to $80 million to upgrade technology, such as software that lets employers place more ads without help, to rekindle growth in North American job listings, its largest business, Chief Executive Officer Sal Iannuzzi said. The company predicted a 25 percent operating margin by the end of next year, up from 19 percent in the quarter just ended.

Sales of North American job listings rose 7 percent to $174.5 million, missing the 11 percent forecast of Citigroup analyst Mark Mahaney.

Monster's quarter included 10 cents a share in severance expenses for executives who left in April and legal costs from a probe of backdated stock options that led the company to restate results last year. Excluding that, profit of 32 cents missed the 34-cent average estimate of 15 analysts surveyed by Bloomberg. Thomson Financial projected 32 cents.

2007 Forecast

Monster cut its 2007 revenue forecast to $1.34 billion to $1.37 billion, from $1.36 billion to $1.4 billion previously. Analysts projected $1.37 billion, according to the average of 19 estimates in a Bloomberg survey.

Shares of Monster rose $2.56 to $40.16 at 4 p.m. New York time in Nasdaq Stock Market trading. They have fallen 14 percent this year.

Job Cuts

Job cuts in human resources and finance will eliminate duplication in the U.S. and Europe, Iannuzzi said in an interview. The U.S. sales team will also shrink as Iannuzzi tries to boost the percentage of job ads Monster clients place on the Internet themselves. Monster processes only about 15 percent of ads electronically, he said.

The job cuts come as analysts question whether Monster has saturated the market for online job ads. The company's North American job-listing sales grew 26 percent last year.

The company also faces competition from CareerBuilder.com, a venture of McClatchy Co., Tribune Co., Gannett Co. and Microsoft Corp. that has said it boosted first-half sales 16 percent, most of which was in the U.S., Boyd said.

Source: Bloomberg