Aug 9, 2016

The news broke overnight that the Dutch staffing giant Randstad bought Monster, paying $3.40 a share equating to $429 million for the once industry leading career site. That’s a 23% premium over Monster’s close Monday at $2.77.

Probably not at all coincidentally, the announcement came just hours before Monster’s second quarter financials were released. Because of the Randstad deal, Monster cancelled its quarterly conference call with financial analysts, no doubt to the relief of company executives who would have been hard pressed to put a good face on the numbers.

Monster lost $124.2 million in the three months from March 1 to June 30. That translates to $1.40 a share. A big part of that is due to accounting for the impairment of goodwill and the price of stock options it granted. Adjusting for that as Wall Street analysts do, Monster lost 2 cents a share. That missed even the modest expectations of analysts whose consensus forecast was that the company would earn a penny a share. And the company had to dip into its reserves to fund its operations, never a good thing.

However you want to look at it, Monster has been, if not a failing company, then one in serious decline for years. Last year, Monster’s revenue from its worldwide operations totaled $667 million, not much more than its 2003 revenue.  The company had a profit last year; it was the first winning year since 2011. (In 2013, Monster had a tiny loss.)

When it tried to sell itself back in 2012, then CEO Sal Iannuzzi said, “The real issue is we know we have value and we know we can go around and look for opportunities to get that.” Much to its chagrin the company found no one wanted it; at least not at a price Iannuzzi and the board were willing to accept.

After a fruitless year, Iannuzzi took down the “For Sale” sign and, doing his best to put a good face on the situation, he declared that the company had a plan for the future. “We have a number of very strategic initiatives on the way,” he told analysts on a conference call. He declined to offer any details.

Those came months later when the company announced a “three pillar” strategic plan that, while CEO Iannuzzi called it “disruptive to every one of our competitors,” was in more ways imitative of its competitors:

  • It began aggregating job ads from all over the web, copying what Indeed has done years earlier.
  • A low cost pay for performance component was added to its duration pricing plan.
  • Candidate profiles would be compiled from across the internet, including from social media, bolstering its then existing database of 111 million candidates. Months before, the technology careers site,, announced its “Open Web” which did the same thing for tech professionals.

All that the strategy did was to mark Monster as a “me too” company, a mighty fall from the industry dominance it enjoyed not that many years before. Where Monster began to slip was when it scoffed at the mid-decade startups like Indeed and SimplyHired. Years ago, a company official told me aggregating jobs and charging by the click was a flawed model because it didn’t appeal to “quality” candidates, and had other problems.

Monster also was unable to capitalize on areas where it was, actually, innovating. SeeMore, its cloud-based search service, was at the forefront of the cloud services trend. It gained only modest traction. Building up its database with millions of profiles — one of its strategic “Pillars” — had almost no impact; by 2014 recruiters were already spending more than a billion dollars with LinkedIn, where millions and millions of potential candidates compiled their own profiles.

CareerBuilder, Monster’s leading competitor for most of the last decade, was meanwhile reinventing itself as a services and data provider. Its job postings and resume database business is still a substantial contributor, but today’s CareerBuilder’s emphasis is on software-as-a-service, which last year accounted for 21% of its (undisclosed) revenue. That part of its business grew 30% last year.

What’s ahead for Monster? Randstad said the company will continue to operate as a separate entity, keeping its own brand identity. The announcement is not specific as to how buying Monster helps Randstad, though it does offer some hints. As one of the largest providers of temp help and other staffing services in the world, Randstad plans to leverage Monster’s distribution channels to attract candidates and promote its services.

Jacques van den Broek, Randstad’s CEO, said, “Monster is a natural complement to Randstad. The transaction is aligned with our Tech and Touch growth strategy and reflects our commitment to bringing labor supply and demand closer together to better connect the right people to the right jobs.”

As have other staffing firms, Randstad has expanded its product line to include such areas as outplacement and a broader array of HR services. What it lacked was a broad distribution network, something Monster has actively grown over the last several years. If Randstad seeks to offer a soup-to-nuts HR lineup, Monster adds the recruitment advertising component. But it also brings its 6Sense matching technology, as well as an enormous candidate database.

The deal requires the approval of Monster’s shareholders. The company will set a date for a vote in the near future. The deal is expected to close in the fourth quarter of the year.