Thursday, June 07, 2007

Monster Worldwide (NASDAQ:MNST): Color on management shake-up

Several firms are out commenting on Monster Worldwide (NASDAQ:MNST) after the co announced a management shake-up last night:

- Citigroup notes that although the change was unexpected, their view is that it was largely driven by the new CEO wanting to have his own team in place. The announcement did mention that the change was intended to support the future growth of MNST's Internet Advertising & Fees business, and in our view that segment does need to improve.

Firm's channel checks on Careers North America indicate a stabilization of this part of MNST's business (56% of rev. in Q1:07) as opposed to the consistent deceleration we have seen over the past 3-4 quarters.

Reits Buy and views the 2-3% after-market correction as a buying oppty.

- Banc of America thinks investors are likely to be initially disappointed with the CFO change given Lanny Baker's exposure with the company over the last several years. However, the new CFO brings considerable experience to the company.

The changes are not unexpected in their view, given the CEO's goals and prior tenures. However, the changes came earlier than they would have expected. BAC views this development as a positive as senior management has been able to put its plan in place sooner than expected.

No changes to their estimate or thesis. While the stock is bidding down in the aftermarket, they would use any weakness as a buying opportunity.

- Baird notes CFO Lanny Baker, who was very well regarded by investors, is leaving the company. Heis being replaced by Tim Yates, who has an impressive background (CFO of Symbol Technologies, CFO and CAO of Banker's Trust, CFO Saguenay Capital management, Yale undergrad, HBS MBA). More importantly, Mr. Yates has a long, and successfultrack record of working with new CEO Sal Ianuzzi including his role as CFO of Symbol Technologies (which was turned around and sold under Mr. Ianuzzi's leadership) and previously at Banker's Trust.

Mr. Iannuzzi also indicated that he plans to invest to build long-term competitive advantage. To that end, the firm believes the company will wisely invest for the long run, withless emphasis on very short-term results. They are not changing their estimates at this time, but note that management will likely be less influenced by short-term profit targets established previously. Thus it is possible that estimates or full-year guidance can be revised.

Baird thinks the stock may reactnegatively in the short term due to the reduced perception that a sale may be imminent given the recent changes. The increased emphasis on long-term investing (and the potential for revisions) could also negatively impact shorter-term investors. In addition, they note that former CFO Baker was popular with many investors. Maintains Neutral and $46 tgt.

Notablecalls: It surely looks like Goldman's negative call from May 22 is playing out here (see arvhives). While most firms are calling the 2% decline in after hours buyable, I'm yet again going with Baird's rationale here. Short-term profit targets set by previous management may indeed be thrown out of the window. That will hurt the stock.

While I think MNST will be buyable for a bounce, it's not going to happen 2% lower. More like 5%. In fact, I'd be on the lookout for some short-selling oppys in MNST early on. Tight leash, though as MNST is a tough stock to short.

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