Shares of Monster Worldwide Inc., the parent company of online job board Monster.com, fell Monday, after analysts wrote that Yahoo Inc.’s move to sell classified advertisements in newspapers is a negative for the company.
Monster’s stock fell $2.18, or 4.7 percent, to $44.54 in morning trading on the Nasdaq. In the past year, shares have traded between $34.75 and $59.99.
Under the terms of the deal, seven newspaper companies including Cox Newspapers Inc., E.W. Scripps Co. and MediaNews Group Inc. — which all together represent more than 150 newspapers — will use Yahoo technology to sell ads online.
Yahoo and its newspaper partners are starting with an overhaul of career-related classifieds. In the first phase of the deal, advertisers who post a job in any of the newspapers will also be able to list the position on Yahoo’s HotJobs site.
“We believe the alliance could hurt Monster by adding competition,” wrote UBS analyst Kelly Flynn in a note to investors. Flynn, who rates the stock “Neutral” with a $49 price target, wrote that the last time newspapers got together to cooperate on an advertising venture — the purchase of the CareerBuilder site in 2000 — Monster.com lost market share.
The partnership “could hurt Monster’s effort to add more local/small business customers,” Flynn wrote, which the company needs to do in order to grow.
In a note to investors, Wachovia analyst John Janedis called the Yahoo deal a negative for Monster. Not only does the new consortium cut down on the number of papers Monster could work with to expand local listings, it also creates a classifieds sales vehicle that goes far beyond Monster’s careers-only offering.
“Its focus on the newspaper classifieds vertical rather than solely recruitment advertising is a differentiating factor relative to Monster in our view and is a modest negative to the company,” Janedis wrote.
The analyst added that the remaining mid-sized papers — those who are not owners of CareerBuilder, or signed on with Yahoo or with Google Inc. in a similar deal — are mostly locally owned by smaller companies, and would yield smaller, less lucrative deals.