TMP's Monster Cushions Slipping Revenue

In what’s become an oddity among major multimedia ad firms, recruitment giant TMP Worldwide saw its widening offline losses cushioned by revenues from its online unit, Monster.com.

Almost half of the New York-based company’s revenue came from Maynard, Mass.-based Monster.com, which brought in greater billings than its offline counterparts — considered the nation’s top yellow pages media agency.

TMP’s revenues came in at $326 million, a decrease of 10 percent from third quarter. After costs, the company posted earnings of $27.3 million, or $0.24 per share — down 31 percent from last quarter but in-line with analyst consensus, according to Thomson Financial/First Call.

For the full year, TMP posted net profits of $123.3 million, or $1.09 per share up 19 percent and 17 percent, respectively, from 2000. That year-over-year earnings growth was powered largely by Monster.com, which posted a 41 percent year-over-year increase in billings, while TMP’s advertising, marketing and consulting businesses slipped significantly.

“The downturn in the economy and reduction in human resource spending has prompted client organizations to seek employment solutions that are better, cheaper and faster — and our Interactive solutions fill this need,” said TMP president and chief operating officer Jim Treacy. “As expected, weakness in the economy continued to impact our commissions and fees and operating results … However, the slight increase in our Interactive business was a positive sign that our innovative solutions continued to take market share from traditional competitors.”

TMP also gave notice that it was cutting its guidance for 2002, with full-year earnings now expected to be in the range of $1.35 to $1.40 per share — down from the previously expected $1.55 to $1.65 per share. Still, matters would be worse without the sizable contribution of Monster.

“Anticipated gains in Interactive are expected to be offset by further declines in most of the company’s traditional lines of business, specifically, Executive Search, eResourcing and Advertising & Communications,” TMP said.

Indeed, company executives said TMP, which announced a wide restructuring and cost-cutting effort in late 2001, would consider making future acquisitions in the online space — but not in the offline arena. TMP was outbid for rival career site HotJobs.com by Web portal Yahoo in December.

“As we told you in November, all acquisition activity in our traditional businesses has ceased,” Treacy said during a conference call with analysts on Wednesday. “But we continue to leave our acquisitions open as it relates to the online space.”

Treacy added that the company would continue focusing on driving sales of recruitment advertising on Monster as it seeks to revamp its services.

“We will continue to do the cross-sell we’ve always done well, feeding the Monster,” he said. “It’s why Monster went from just $400,000 in sales for the entire year of 1995, to sales of $536 million in the year 2001 … The strategic reorganization of the company … will generate even greater opportunities to cross sell our services and to grow Monster’s top line.”

Despite TMP’s growing dependence on Monster.com, the online job site could be facing one of its toughest challenges to date. A handful of major employers — like IBM, Intel and Lockheed Martin — this week took off the wraps of their own career site, designed to allow each to list their open jobs without having to pay a middleman — like Monster.com.