Monster Cleans House

At first glance, online employment pioneer Monster Worldwide (Nasdaq: MNST  ) could appear to be a company in crisis. But dig a little deeper, and it can be considered a king of cash that is taking the appropriate steps to ensure profitable growth going forward.

Monster has provided plenty for investors to chew on lately, spanning from an unpleasant stock-options investigation to turnover in the executive ranks. And more recently, the new management team has been realigning the overall corporate structure, including a significant restructuring plan announced today. Under this new plan, Monster expects to cut current staffing levels 15%, which will lead to hefty severance charges for the next several quarters.

During the quarterly conference call, management conceded it is not happy with current company performance -- especially in North America. In this market, growth is slowing and competition remains fierce, with rivals such as Kforce (Nasdaq: KFRC  ) , Manpower (NYSE: MAN  ) , Adecco, and Yahoo's (Nasdaq: YHOO  ) Hotjobs website. Additionally, Monster related a number of operational miscues here at home.

However, total quarterly revenue advanced 20% as international growth improved an impressive 57%, growing to 40% of total revenue. The same can't be said for second-quarter earnings, which dropped 28%. But the current headcount reductions are intended to keep Monster a growth company and management is targeting operating margins of 25% by the end of next year. Despite a tough quarter, free cash flow generation continued to be strong, leaving plenty of excess capital to make acquisitions and increase stock buybacks.

Possible cash on hand grew to over $5 per share, highlighting the appeal of Monster's business model. Although the shares aren't necessarily a steal at more than 20 times trailing 2006 free cash flow, there are many positives. Its revenue is growing in the double digits, international growth prospects are compelling, and free cash flow margins still exceed 10%. Monster is definitely worth keeping an eye on -- especially if the current restructuring moves further boost results going forward.   

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.

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