Monster Profits Slide As CEO Promises A More Aggressive Future

The next time your phone rings it could be Monster on the other end looking for your business.

“Relentless and aggressive,” is how CEO Sal Iannuzzi described the new and improved Monster during a late afternoon conference call with Wall Street analysts. “I promise you we are not going after modest success.”

He pledged nothing short of a “fundamental redirection of sales,” which is already underway. There are more sales people on the ground and they will be “relentless and aggressive in seeking out new customers.”

The primary targets? Companies in the small- to mid-sized range. The U.S. market, he declared, is not saturated; only 4 percent of companies between 10 and 500 employees do business with Monster and only 25 percent of those over 500 employees are customers.

We will, he promised during a nearly 25-minute presentation, “compete aggressively with the goal of capturing market share.”

Shortly before the call Monster released its first quarter financials, which showed revenues flat in North America, expenses sharply up and per share earnings of 18 cents, 4 cents below the average of analysts’ estimates. Earnings were down from a year ago mostly due to sharply increased spending on marketing and promotion.

Revenue was $370.4 million vs. $329 million for the same period in 2007. All the growth came from operations outside North America. International revenue was $153 million compared to last year’s $106 million, with a portion of the growth impacted by currency exchange rates.

Monster’s chief competitor, CareerBuilder, reported eking out a 2.7 percent revenue growth. The privately owned company voluntarily reports only revenue and doesn’t break it down between U.S. and international operations. (CareerBuilder only in the last two years began to aggressively pursue global business.) Yahoo!, which owns HotJobs, does not report the job board’s revenue separately.

Although Monster’s profit dropped 43 percent, revenue was higher than expected, which softened the impact. A Bank of America analyst even commented during the Q&A portion of the call that the flat North American revenues were better than expected.

Iannuzzi and his CFO, Tim Yates, blunted some of the fallout over profits, explaining expenses will throttle back in the coming months as the global marketing push subsides. Of the $31 million spent to rebrand Monster, $18 million was spent in the U.S. and Canada with the balance spent elsewhere, but primarily in Europe.

Similarly, expenses associated with operating the money-losing Tickle, which is being closed, will be eliminated and the benefits of reorganizing the company by unifying divisions will be more fully realized. Headcount at Monster has also been decreased by 600 workers and new hiring kept in check. The company goal, Yates said, was to achieve a 25 percent operating margin by the 4^th quarter of the year.

There were two areas where Iannuzzi stuck out his neck. One was his flat-out assertion that the company has become more transparent and “honest” (his term) in regard to dealing with problems. And the other was suggesting that Monster was seeing “signs” the economy might be turning.

Speaking of last summer’s security breach at Monster that resulted in hackers gaining access to basic information on more than a million jobseekers, Iannuzzi said the way the company dealt with the problem was an example of the new corporate culture. “Monster will not hide,” the CEO said, from unexpected problems. “We moved fast to inform our clients,” he added, evidently not referring to the jobseekers whose records were hacked, since it took the company three days to act when told of the breach and several more to issue any kind of public notice.

On the possibility of market improvement, Iannuzzi said, “While things are down, there are some signs they are turning.” He hastened to qualify that saying it is “very early in the game to be able to declare a direction.”