The company’s shares got no lift from the overall market even though earnings are up, because the employment picture in the months ahead is murky. Murky enough that in releasing its third-quarter financials this morning, company officials estimated earnings for the current fourth quarter would be less than what analysts are expecting.
Monster’s share price opened at $9.25, then dropped sharply as the market digested the news that bookings (contracts for searching and job posting) weren’t likely to increase much in this last quarter and revenue for the year would be significantly less than the company projected in July.
The stock recovered some, closing at $8.83, behind Wednesday’s $8.91 close.
For the third quarter, Monster had revenue of $259 million, an increase of 20 percent over the same quarter in 2010. (The percentage is based on adjusted 2010 numbers, which were reduced to account for advertising business Monster voluntarily gave up. On an unadjusted basis, revenue grew by 13.2 percent). The company earned 13 cents a share (adjusted), or 1 cent more than Wall Street was expecting. Last year, after adjustments, Monster reported earning 2 cents a share.
(Public companies report their revenue and expenses two ways. The GAAP method includes expenses and income that for analysis purposes are one-time costs or are accounting issues that can distort a company’s actual operating performance. The non-GAAP report omits those items. Monster’s “official” or GAAP method report shows it earned 26 cents a share in the 3rd quarter and lost 5 cents a year ago.)
However, revenue for the quarter was less than what analysts estimated by about $5 million.
Monster’s Chairman and CEO Sal Iannuzzi blamed the “macro uncertainties” of the global economy for finally prompting employers to begin pulling back last month. The company first felt the effects in the e-commerce placement of job postings and resume purchasing, and then late in September started seeing customers cut back on their contracts.
Now, says Iannuzzi, the hiring pullback seems to be a trend, or at least enough of a concern that it is prudent to lower the estimates for both bookings and revenue growth. Earlier Monster estimates were based on national and global opinion of strong economic growth. That’s no longer the case.
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“Right now,” said Iannuzzi, “there is increasing uncertainty and fear that we may experience another recession.” For that reason Monster cut back on its revenue and bookings estimates. “We believe it is prudent to manage our business on the assumption” that economic conditions will not improve, he said.
However, Iannuzzi said the situation is different from what it was three years ago. Instead of layoffs and other draconian measures, companies are slowing up on hiring.
CareerBuilder, which is not a public company and volunteers only some financial information, said its North American revenue grew 13 percent in the 3rd quarter to $161 million. Monster’s North American revenue was $123,2 million, a 15 percent improvement over 2010.
Although it doesn’t provide its international numbers, Gannett CFO Paul Saleh said CareerBuilder’s international business grew “in the low 40 percent.” Gannett, the largest newspaper company in the U.S., is the majority owner of CareerBuilder. Some of CareerBuilder’s performance is covered during Gannett’s quarterly financial report.
During the company’s conference call with financial analysts, CareerBuilder’s international opportunities were cited by Gannett CEO Gracia Martore, who said, “We’ve improved the results as we’ve been in many of the markets that we are in internationally year-over-year. And so we … see that as a great opportunity to continue to expand upon our international offerings there. And as Paul mentioned, we saw a terrific revenue growth overseas, albeit from a small base, but that’s a real area of opportunity for us going forward.”
The other two leading public careers advertising sites will report next week. Dice Holdings reports November 2, LinkedIn reports November 3.