By Kerry Grace Benn
NEW YORK (Dow Jones) – Monster Worldwide Inc.’s (MWW) shares plunged Thursday after the company said late Wednesday its expenses will likely increase this year as revenue remains flat. The online job search company also forecast first-quarter revenue below analysts’ views.

That forecast comes despite the company’s announced acquisition of Yahoo Inc.’s (YHOO) HotJobs Web site for $225 million in cash, a move generally well-received. Still, analysts said the deal may not help right away because it isn’t expected to close until the third quarter; one suggested it may be expensive.

Shares were recently down 21% to $12.93 amid a broad market downturn. The stock is off 23% so far this year.

Monster said during its conference call that it expects full-year operating expenses to be up 3% to 6% on higher first-quarter benefits and marketing expense. It expects full-year revenue to be flat from a year earlier.

“All of a sudden you’re at some kind of loss” for the year because of flat revenue and higher expenses, SunTrust Robinson Humphrey analyst Tobey Summer said in an interview.

Meanwhile, the company reported deferred revenue increased 15% sequentially to $306 million in the fourth quarter, which Goldman Sachs analyst Ingrid Chung wrote in a note to clients suggested underlying sales “have finally bottomed out.”

Summer added there’s a lag between the way the company reports revenue and what its sales are today because of deferred revenue. So current sales are getting better, but revenue may not be good for the next few quarters because those sales aren’t recognized yet.

The acquisition of HotJobs will also vault struggling Monster back into the top spot in the U.S. online employment classifieds market, ahead of rival CareerBuilder LLC, which is jointly owned by Gannett Co. (GCI), Tribune Co., McClatchy Co. (MNI) and Microsoft Corp. (MSFT).

Monster and Yahoo also struck a three-year agreement under which Monster will provide career and job content for the Internet company’s home page in the U.S. and Canada. Under terms of that agreement, Monster will make payments to Yahoo, subject to annual floors and ceilings, based on the number of clicks and expressions of interest that Yahoo drives to the classifieds company.

SunTrust’s Summer said it’s pretty significant for Monster to get all the eyeballs that look for careers on Yahoo. HotJobs has actually had more views than Monster for a while, he said, but Yahoo and HotJobs haven’t done a good job of converting those views into revenue.

Stifel Nicolaus analyst James Janesky said the deal should allow Monster to compete better as it allows the company to increase its relevant traffic base. But he called the acquisition “expensive,” saying it’s at three times revenue, while Monster trades at less than two times revenue. He added he doesn’t see a lot of revenue synergy and said the deal will take a while to close, so it may not help the company right away.

Other job-search companies were down Thursday amid U.S. initial jobless claims data that came in worse than analysts had expected. Dice Holdings Inc. (DHX) shares fell 6.3% to $6.07, while Spherion Corp. (SFN) declined 1% to $6.50.

Dice Holdings Chairman, President and Chief Executive Scot Melland said the HotJobs deal has the opportunity to be a win-win situation for Monster and Yahoo, as Yahoo can focus on its core operations and Monster gets more traffic. His company, Dice, focuses on specific segments such as financial services and technology staffing.

Still, Melland said Monster will have to show the ability to manage the customer overlap it faces on integrating HotJobs and getting the most out of the traffic deal.

-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353; kerry.benn@dowjones.com

If you enjoyed this post then Subscribe to Savvy Investor via RSS