Monster Reports In-Line 2Q

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Monster Worldwide (MWW) reported net income of $4.8 million or 4 cents per diluted share in the second quarter of 2012, compared with a net income of $10.9 million or 9 cents per diluted share in the year-ago quarter and a net income of $3.7 million or 3 cents per share in the previous quarter. 

Excluding one-time charges, net income came in at 6 cents per share in the quarter, in line with the Zacks Consensus Estimate.
 
Monster reported revenues of $237 million in the second quarter of 2012, down 3.7% sequentially and 12.1% year over year. Currency translation had a negative impact of $9.2 million on revenue in the first quarter.
 
Bookings (representing the dollar value of contractual orders received, and considered a key indicator of future revenues) decreased 4% year over year to $242 million. Bookings increased 14% year over year due to continued strength in the company’s Government Solutions business, Staffing and Newspaper verticals. The growth was offset by weakness in Europe and Asia, which were negatively impacted by global economic challenges and currency translation. 
 
Careers revenue came in at $217 million, down 8.0% year over year. North America generated revenues of $116 million, down 5% year over year.
 
Careers-International revenue was down 11% year over year at $101 million. Internet Advertising & Fees revenue of $20 million was down 41.2% year over year. Effective July 1, 2011, Monster decided against engaging further in the arbitrage lead generation business, a portion of the Internet Advertising & Fees (IAF) business. This was due to the lack of profitability and constraints in the business.
 
Excluding $11 million of arbitrage lead generation activity in the first quarter of 2011, IAF revenue declined $3 million from the year-ago quarter.
 
In the first half of 2012, Monster generated $28.1 million of cash from operations and incurred $33.3 million in capital expenditures. Monster ended the quarter with cash and equivalents of $157.5 million, down from $252.6 million at the end of the previous quarter. 
 
As of March 31, 2012, deferred revenue was $372.3 million, down from $408.3 million at the end of the previous quarter.
 
During the second quarter of 2012, Monster repurchased 3.0 million shares for $8.48 per share, totaling $26 million. The company still has approximately $149 million remaining under the company's $250 million share repurchase authorization.
 
Guidance
 
Going forward, Monster expects bookings to be down by 10% to flat year over year.  Revenues are projected to decrease by around 6% - 12% in the third quarter of 2013.
 
The company expects a continued weak business environment in Europe. Monster expects earnings to come around 2 cents to 7 cents per share. Excluding one-time items, earnings per share is projected to come around 13 cents. 
 
The company had earlier announced that it is exploring strategic alternatives with respect to maximizing shareholder value, and retained Stone Key Partners LLC and BofA Merrill Lynch as financial advisors in connection with this review. Management stated that the company will not provide additional details as of now. 
 
We continue to maintain a long-term Neutral recommendation on Monster. Our recommendation is supported by Zacks #3 Rank, which translates into a short-term Hold rating.
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