I think Rick did an excellent job describing TMP Worldwide and the positive attributes that make the company well worth keeping on the radar. That said, Homestore has many of the exact same attributes but has positioning that is even more dominant as well as much higher growth, all for a company valued at roughly half that of TMP Worldwide.
TMP Worldwide is profitable, yes. However, the vast majority of its profits are thanks to TMP's mature "offline" businesses. On the other hand, Homestore has all the upside of being one of the rare supercharged and profitable dot-coms without the baggage of shrinking offline businesses. In fact, TMP's offline advertising and recruiting businesses, which still are responsible for well over half of the company's revenues, actually saw sales shrink about 2% year-over-year in the first quarter. Meanwhile, just about all of Homestore's business lines are exploding. Remember, Homestore is growing at about six times the rate of TMP Worldwide.
While I agree that the acquisition of HotJobs will undoubtedly cement Monster's premiere positioning within its sector, the acquisition will be dilutive to current TMP Worldwide shareholders and bog future profits down with goodwill expenses. This may also be a case where the sum of the parts may not be worth more than the combined whole. Where's the synergy in acquiring the HotJobs.com site only to keep it as a totally separate entity?
It's also interesting to note that TMP's relocation site MonsterMoving.com actually uses content from Homestore's realtor.com. Meanwhile, Homestore just acquired competing site move.com from Cendant (NYSE: CD) and still has a substantive relationship with Cendant, the owner of the Century 21, Re/Max, and Coldwell Banker real estate brands. Move.com should be one of the very last major acquisitions for Homestore.com while we still have to consider the need for TMP Worldwide to go through expensive acquisitions to stay atop of its game.
I would also like to point out that realtor.com has a much more symbiotic relationship with the industry it is serving. Realtor.com provides a way for real estate professionals to do their business in a much cheaper and more efficient way than the traditional ways of marketing and generating leads. TMP Worldwide, however, has to fight much more aggressively with the major newspapers for dollars spent on jobs advertising, and the newspapers have yet to mount a substantive counterattack to TMP's intrusion into their bread-and-butter classified advertising business.
I'm not trying to come off as bearish on TMP Worldwide. I still find the company quite attractive, but I believe that Homestore.com is even more appealing and has greater upside potential.
Paul Larson found his current home using realtor.com. Really. You can see Paul's stock holdings online. The Motley Fool is investors writing for investors.
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