Zacks_Analysts' Blog : Monster Misses by a Penny - Analyst Blog

Monster Worldwide (MWW) reported revenues of $250 million, down 3.5% sequentially and down 1.9% sequentially. Currency translation had a $1.1 million negative impact on revenue in the fourth quarter.

Effective July 1, 2011, Monster decided against engaging further in the arbitrage lead generation business, a portion of the Internet Advertising & Fees (IAF) business. This was due to the lack of profitability and constraints in the business.

The year-ago quarter included $12 million of revenue from the arbitrage lead generation activity. Excluding this portion of the IAF business from the year-ago quarter, revenue increased 2%.

Bookings (represent the dollar value of contractual orders received, and are considered a key indicator of future revenues) were roughly flat year over year at $314 million. Global Careers bookings increased 1% year over year. Currency translation had a $1.4 million negative impact on bookings in the fourth quarter 2011.

Careers revenue came in at $229 million, up 2.7% year over year. Excluding a $3.3 million purchase accounting adjustment related to the HotJobs acquisition, Career revenues increased 1% year over year. North America generated revenues of $119 million, down 5% year over year.

Careers-International revenue increased 8% to $124 million. Internet Advertising & Fees revenue of $21 million was down 34% year over year. Excluding $12 million of arbitrage lead generation activity in the fourth quarter 2010, IAF revenue was essentially flat on a year-over-year basis.

Monster reported a net income of $10.9 million or $0.09 per share compared to a net income of $31.8 million or $0.26 per diluted share in the previous quarter and a net income of $0.5 million or break-even earnings in the year-ago quarter.

Excluding one-time charges, net income came in at $0.11 per share, missing the Zacks Consensus Estimate by a penny.

Monster generated $25 million of cash from operations and ended the quarter with cash and equivalents of $250 million, down from $321.8 million at the end of previous quarter. 

As of December 30, 2011, deferred revenue was $380.0 million, down from $354 million at the end of the previous quarter.

During the fourth quarter of 2011, Monster repurchased 5.5 million of shares at an average cost of $7.62 per share for $42 million. The company still has approximately $208 million remaining under the company's repurchase authorization.

Guidance: Going forward, Monster expects bookings to decline by approximately 6% – 10%. Revenues are projected to decrease by around 3% – 7%. Monster expects to generate earnings to range around break-even to $0.04 per share. Revenue and expected growth rates for first quarter 2012 exclude the impact of the arbitrage lead generation activity.

For 2011, Monster reported revenues of $1,040 million, up from $914 million in 2010. The reported figure also included $22 million of revenues from the arbitrage lead generation activity.

Net income came in at $53.8 million or $0.43 per diluted share compared to a net loss of $32.0 million or $0.27 per share in 2010.

Concurrent with the earnings press release, Monster announced a series of cost savings initiatives amid uncertain global environment. These activities include a workforce reduction of approximately 400 associates, or 7% of its full-time staff on a global basis, consolidation of certain office facilities along with control in discretionary spending.

Management expects the actions to result in annual savings of approximately $100 million. In addition, the company will record a cumulative pre-tax charge in the range of $30 million to $40 million, of which $25 - $35 million is expected to be cash expenditures. The majority of the associated charges are expected to be recorded in the first quarter of 2012.

The results led to a 20.38% decline in share price in regular trading to close at $7.15 although the company recovered 1.40% in after-market hours trading.