Monster soars as CEO mulls "strategic alternatives"

Thu Mar 1, 2012 3:33pm EST

(Reuters) - Monster Worldwide Inc Chief Executive Sal Iannuzzi told investors on Thursday that the operator of the job-search website was considering all "strategic alternatives," sending the company's shares up more than 17 percent.

"Our shareholders deserve a better return," Iannuzzi told an investor conference. "The board and the management is also focused on pursuing all strategic alternatives to increase shareholder value."

Iannuzzi did not specify what alternatives the company was considering. However, investors typically interpret discussions of "strategic alternatives" as an indication a company is considering selling all or part of itself.

A Monster spokeswoman declined to elaborate on Iannuzzi's statements.

Prior to Thursday's rally Monster shares had tumbled about 61 percent over the past year, a far steeper slide than the 21 percent fall of the Thomson Reuters United States Employment Services Index.

One analyst cautioned that there were no signs that a deal for Monster was imminent.

"We know of no buyer poised to scoop up MWW," James Janesky of Avondale Partners wrote in a note to clients. He said that the company could sell for $10 to $13 per share, but held steady his "market perform" rating and $8 target price on the stock.

"Given that the company is engaged in layoffs of 7 percent of its work force and other restructuring, any kind of deal might be a ways off," Janesky wrote.

COMPETITIVE THREATS

Slow hiring as a result of the weak U.S. economy and rising competition from the social media sites including Facebook and LinkedIn Corp have taken a toll on Monster's traditional business model -- job ads on its Monster.com website.

When the company reported financial results in January, it warned investors that it expected first-quarter profit to be lower than analysts expected and that it planned to cut its staff by about 7 percent, or 400 jobs.

Iannuzzi said his company regards itself as sharply undervalued compared with its peers, which also include Dice Holdings Inc, Manpower Group and CareerBuilder.com, partly owned by Microsoft Corp.

"The stock price is not where it should be," Iannuzzi said at a R.W. Baird conference. "If you compare us to our competition, any company in our space, our multiple is severely below them."

Shares of LinkedIn have nearly doubled since the company's May initial public offering.

He said Monster has no interest in pursuing takeovers of its own.

"We have no acquisitions in mind," Iannuzzi said. "So if anyone's concerned about where our money is going to go, we don't have acquisitions. Any excess cash will be returned to the shareholders via stock purchase."

The New York-based company has $250.3 million in cash and equivalents on its balance sheet and a market value of $828.4 million, according to Thomson Reuters Data.

Options traders piled on Monster in the wake of the news, with volume surging 32 times higher than a typical day, according to options analytics firm Trade Alert.

"The positive comments spurred a rush into Monster Worldwide options," said Interactive Brokers Group options analyst Caitlin Duffy.

Shares of Monster were up $1.21, or 17.4 percent, at $8.15 in late trading on the New York Stock Exchange.

(Reporting By Scott Malone in Boston, additional reporting by Doris Frankel in Chicago; editing by Andre Grenon and Mark Porter)

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