Was HotJobs Really that Hot an Investment?

In recent months, there have been more tackles, upsets, and penalties in online recruiting than in any of the gridiron match-ups I've witnessed.

Yahoo! (Nasdaq: YHOO) notched one of the biggest scores last month, when it snatched HotJobs.com from the clutches of Monster.com for a cool US$436 million.

Why all the heat and commotion over online job sites? Because, as Yahoo! realized, a recession may be the best time to befriend job-seekers. And while the payoff may not be immediate, HotJobs.com will likely bring Yahoo! one step closer to the promised land of sustained profitability.

Just the Facts

To recap, back in June 2001, TMP Worldwide (Nasdaq: TMPW), the parent of the leading job site, Monster.com, staked a claim to acquire the No. 2 job site, HotJobs.com for about $400 million.

Then, in August, newly appointed Yahoo! CEO Terry Semel made an unsuccessful bid to round up Headhunter.net, ultimately losing the property to CareerBuilder for $200 million.

Not to be dissuaded from his job classifieds mission, Semel bullied TMP/Monster.com out of the running for HotJobs, with the December bid.

All Monster.com took away from the brawl were $17 million in fees from HotJobs, which it will presumably use to mount a gloves-off marketing campaign. Get ready, Super Bowl advertising fans!

Golden Opportunity

So will Yahoo! live to see the fruits of its labor? You bet.

The online career classifieds business -- now valued at more than $1 billion -- will increase up to 35 percent annually, reaching between $2 billion and $4 billion by 2005, according to recent estimates by Forrester Research.

Powered by Yahoo!'s marketing machine and brand equity, HotJobs.com has a shot at unseating Monster.com as the top job site. In any event, HotJobs will claim a healthy chunk of these billions for its new parent.

Timing is Everything

Easy for me to say, I suppose. But here's why Semel will be keeping his job for at least another six months.

First, the timing of the HotJobs.com acquisition couldn't be better. The increasing droves of unemployed professionals are required by law to spend a portion of each week scanning job listings, in order to qualify for unemployment benefits.

Granted, job-seekers do not pay for the service, so Yahoo! will not see the traffic spike impact its bottom line immediately, aside from a few more advertising dollars.

But as the economy recovers and more jobs become available, employers and recruiters will be all the more willing to pay listing fees to reach this budding talent pool.

Hot Name

Second, from a branding standpoint, HotJobs.com puts Yahoo! on the job classifieds map, much more than Headhunter.net would have.

The overall awareness of Yahoo!'s own Careers section has been diluted by its collage of other offerings. Indeed, Yahoo!'s resume pool is less than half of HotJobs.com's five million.

When you think of job searching, you don't think of Yahoo!, do you? But what a difference $436 million can make.

New Customers

And finally, HotJobs.com could fit snuggly into Yahoo!'s service-oriented Enterprise Solutions division. This potential profit-center delivers corporate portals and other online tools to business customers.

With mounting numbers of candidates competing for fewer jobs, there is a clear "pain point" in human resources departments to screen and hire effectively from among the masses.

Yahoo! could package HotJobs.com technology and deliver an application to alleviate this pain, as long as it could prove the application's long term value.

Ready to Rumble

Not surprisingly, Monster.com has launched a counter-attack, with its announcement of a software product called Monster Office HQ, which allows human resource managers to track job postings and to collect resumes in a searchable database.

Watch for a similar effort from Yahoo! in the coming months.

Too bad there's no Las Vegas line on the online recruiting battle. My money would be on Yahoo!/HotJobs in a nail-biter.

What do you think? Let's talk about it.