Monster: Job Demand Dips

Oct. 1.09 | About: Monster Worldwide, (MWW)

Thursday, Monster Worldwide Inc. (NYSE:MWW) came out with its monthly employment index – The Monster Employment Index. This index observes online job demand on a monthly basis, and it dipped slightly in September after an expected significant rise in August due to recruitment activity in late summer.

Monster Worldwide is an online recruitment firm and the parent company of Monster.com, the leading career website in the world. The company, headquartered in New York, is also the largest advertising agency network for worldwide recruitment.

The index observed that online labor demand in the mining, quarrying and oil/gas extraction industries rose for the third consecutive time in September due to recent hikes in energy and commodity prices, which might have accelerated hiring in the sector. The construction sector was stable, which indicates that the housing market might have reached a bottom.

Online demand for blue-collar occupations rose in September with installation, repair and maintenance leading all categories. Demand remained stable for most white-collar occupations, with business and financial operations exhibiting a solid three-month trend.

Monster earns a significant portion of its revenues from recruitment advertising. Many of the key industry verticals of financial services, retail, manufacturing and construction served by Monster were severely affected by the slowdown in the global economy and not able to renew their contracts with the company.

This has adversely affected the top-line in the past fifteen months. Management had earlier stated that as the business begins to bottom at a particular level, there will be a lag in revenue as a result of lower balance in deferred revenue from prior quarters and sales converting to revenue. Though the decline in sales in Western Europe has slowed down, revenues from international channel will be a drag on revenues in the near term.

Even though the pace of slowdown has stabilized, it will take awhile before the companies start hiring and demand starts improving. As of now, the road to recovery seems just a bit long for Monster. We maintain our Neutral rating on the stock.