A Monster Acquisition of HotJobs

Yahoo! (Nasdaq: YHOO  ) is quitting on HotJobs. The fallen dot-com rock star is unloading its job-listings website to Monster Worldwide (NYSE: MWW  ) for $225 million in cash.

The deal isn't exactly a surprise. HotJobs has been rumored as buyout bait since Carol Bartz arrived at Yahoo!. It's also the second significant divestiture in as many months, following Yahoo!'s sale of email enabler Zimbra to VMware (NYSE: VMW  ) in January.

The deal finally unites HotJobs with Monster.com. Monster's parent had agreed to acquire the company shortly after the dot-com bubble burst in 2001, but was ultimately trumped when Yahoo! wooed HotJobs away in a cash-and-stock deal valued at $436 million at the time.

Your calculator doesn't lie: Yahoo! is taking a hit on this sale. Then again, it's not as if Yahoo! needs the money. It closed out its latest quarter with $4.5 billion in cash and marketable securities. The company didn't need to sell low -- and, yes, this is selling low.

The industry is in a funk right now. In the fourth-quarter results they posted this week, Monster Worldwide and Dice.com parent Dice Holdings (NYSE: DHX  ) reported 27% and 24% drops in revenue, respectively.

With an arsenal of cash at its disposal, one would argue that Yahoo! should have kept HotJobs and snapped up smaller niche sites like Dice or China's 51job (Nasdaq: JOBS  ) . Revenue in Yahoo!'s latest quarter fell 8% before traffic acquisition costs, revealing the danger of putting all of its eggs in the display-advertising basket. Earnings before one-time events also took a hit.

Some will argue that Zimbra and HotJobs aren't core holdings at Yahoo!, but it's not as if shrinking in scope will make Yahoo! a more worthy online advertising competitor to Google (Nasdaq: GOOG  ) . Heck, it all but threw in the flag there when it surrendered its search stronghold to Microsoft (Nasdaq: MSFT  ) .

This isn't a time for Yahoo! to think smaller. If that's what Bartz thinks, she may want to keep HotJobs.com close -- because she may need it in a year or two.

What do you think of Yahoo!'s divestiture strategy? Share your thoughts in the comments box below.

Microsoft is a Motley Fool Inside Value selection. Google and VMware are Motley Fool Rule Breakers recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days. One of them may be just what you're "searching" for.

Longtime Fool contributor Rick Munarriz wonders what would happen if he were to one day cut himself and start bleeding purple. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On February 04, 2010, at 11:20 AM, ebpvet wrote:

    Yahoo HotJobs has $900M in annual revenue in a bad job market with 40% margin after sales compensation and they sell the whole shebang to Monster for $225M in cash?

    Why didn't they take Monster stock. Jesus, this was a FIRE SALE! How can the Yahoo stockholders approve this? It was a GIFT, a friggin' GIVEAWAY!

    They must be desperate to clean up their business in getting ready for the NEXT Microsoft offer.

  • Report this Comment On February 04, 2010, at 12:57 PM, DBSOS wrote:

    $900M in annual revenue? Totally mistaken. Maybe about $100M in revenue per year. The site lacked management - as evidenced by nothing but fake jobs and scams on the site. Yahoo unloading at $250M is a good way to cut a failing property. AND - this cash from Monster pretty much pays for their fancy "it's you" poster campaign:)

  • Report this Comment On February 04, 2010, at 1:16 PM, JD45CA wrote:

    Sad to see Hot Jobs leave Yahoo! Hot Jobs is a destination site for many potential employees. As an employer I liked the Yahoo! reps over the Monster and CareerBuilder reps. Yahoo also offered something MORE than just another Job Board.

    You blew it Yahoo! Too much short sighted thinking...

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