Yahoo! Looks to HotJobs for Ad/Software Revenues

Yahoo, which on Wednesday announced a surprise counteroffer for New York-based recruitment site HotJobs Inc., is orchestrating a play that could boost its bottom line both from advertising and enterprise software revenues.

Sunnyvale, Calif.-based Yahoo’s $436 million cash-and-stock offer tops an earlier, all-stock bid from Monster.com parent TMP Worldwide, worth only about $366 million at press time. Should it be successful in wooing HotJobs from TMPW, not only would Yahoo stand to gain from improvements to its classified advertising revenues, but the deal could also be a boon for its enterprise software unit, a busines that has languished for 18 months.

Recruitment advertising has proven lucrative for HotJobs and TMPW’s Monster.com, both of which have weathered the downturn in online advertising far better than media players, including Yahoo. During last quarter, HotJobs posted $22 million in revenue from its recruitment site, a figure that’s $300,000 greater than a year earlier.

It’s no wonder, then, why Yahoo has highlighted recruitment and classified ads as a chief moneymaker in the future. Earlier this year, the company rolled out additions to its Yahoo Classified and Personals sites, enabling consumers to spruce up their listings by paying additional fees.

It’s an area that chief executive Terry Semel has said would prove crucial to Yahoo’s transformation from a Web play dependent almost entirely on traditional Web ad types — banners, buttons, and skyscrapers — to one getting half its revenue from services, including classified ads.

“The careers advertising and classified business is a large and growing marketplace that lends itself perfectly to our strategy,” he told analysts during a call on Wednesday evening. “Yahoo’s proposal to acquire HotJobs is consistent with our strategy … to build a diversified global business by focusing our efforts and leveraging our core strengths to deeper, more valuable solutions for our consumers and our business partners.”

Semel also reiterated that Yahoo’s listings category — which includes Yahoo Classifieds, Personals and Careers — had been identified by the company as one of its just six business segments (out of a total of 44 current divisions) felt to be “a core part of our strategic focus.”

Yahoo already lists about two million resumes in its Yahoo Careers site, which it administers through a deal with CareerBuilder.com. HotJobs has more than three times Yahoo’s number of posted resumes, and about 7,700 corporate recruiters — or, to put it another way, advertisers.

The promise of Enterprise Resource Planning
Classified advertising revenues isn’t the only thing that Yahoo stands to gain from its rival bid for HotJobs, though. As part of its transition from media to service revenue, the company has become increasingly focused on the enterprise portal business.

Yahoo first unleashed its corporate portal initiative in June 2000. But despite its success in the consumer market, Yahoo has been slow to make inroads with enterprise users, which still rely on the likes of Great Plains, Oracle or SAP. At last count, advertising accounted for about 80 percent of its revenue.

Since its IPO, HotJobs.com has been on a mission to control the desktops of HR departments within the enterprise, a goal that makes it unique among publicly traded companies. Furthermore, there are few public companies that provide only a component of an enterprise resource planning (ERP) solution.

And though HotJobs is best known for its eponymous recruitment site, the firm for years has been dabbling in enterprise software. In 1997, the company released its ASP-based, enterprise-level corporate recruiting system, Softshoe. Three years later, HotJobs purchased Resumix, and software developer that offered an in-house recruitment tool — and later repackaged the unit as HotJobs Software.

As such, HotJobs.com’s offering can easily be incorporated into an overall ERP package. In fact, SAP desperately wanted HotJobs.com to be part of its mySAP.com portal when the initiative was first unveiled the 1999 SAPphire users conference.

As a result, the unit’s eventual integration into Corporate Yahoo seems likely considering how Yahoo for months has been cobbling together a string of alliances and partnerships to beef up its own corporate offerings.

In September, Yahoo struck a deal with Novell to include the enterprise software giant’s directory services in its offering. A month earlier, it appointed its first executive to the post of senior vice president of business and enterprise services. In April, Yahoo announced a deal with SAP to develop a joint intranet portal.

For its part, Yahoo has been reticent to discuss its plans specifically for HotJobs Software; executives said only that it would drive additional revenue, and that Yahoo would “look to combine with the other assets that we have here at Yahoo,” according to Elizabeth Blair, head of Yahoo’s listings businesses.

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