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It is better
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John Sumser

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Five Years Ago

(May 13, 2004) - See the entire week from 1999.

The Dust Settles

(May 13, 1999) - We live in a weird time. The Reuters story about yesterday's launch was headlined "CareerBuilder IPO Fails To Stun Investors." We, on the other hand, find lots to mine in the relative success of the IPO. At market close, CareerBuilder was trading at $16, much higher than we'd expected. The market analysts viewed CareerBuilder's performance with jaded eyes:

``You have to have a killer concept, a next generation of something-type (Web) product in order to trade at a great premium,'' Roth added. CareerBuilder's site is essentially a resume exchange, Roth said. Clients pay a fee to list job openings. But Roth questions the company's effectiveness.

``If they would come up with something new and unique, like quicker recruitment, recruitment conferences, getting people together online to do interviews ...,'' Roth said.

``But the online recruitment technology is not quite there yet,'' he added.

Roth believes that future successful online companies will have to have a big name backing them, solid revenue streams or a niche product, or all of the above.

-from the Reuters story

Meanwhile, we were watching the fundamentals. At $16/share, CareerBuilder accomplished the following things yesterday: They gained instant access to roughly $35M in operating cash (we're jealous) More importantly, their remaining shares of stock have a market value of almost $250M (market cap) With the equivalent of nearly $300M in unfettered spending capability, CareerBuilder is set to follow TMP's acquisition path. Everyone in the industry will begin to calibrate their net worth based on the IPO stats. With 250,000 unique visitors in March, a valuation based on traffic would make CareerPath worth double, Career Mosaic and Headhunter.net worth quadruple and Monster worth 9 times the value of CareerBuilder.

That's just inside the pure web segment of the industry. Imagine the corporate offices at CDI. With a market cap of only double, management must be really kicking themselves for not investing more heavily in their (and MRI's) website. Korn Ferry, trading at a significant premium, has only a slightly higher value. Heidrick and Struggles stock price is languishing at its opening price with a market cap roughly equal to CareerBuilder. TMP, off by more than 33% from its highs, has a market cap of over $2B (which explains their acquisition prowess.)

Right now, the non-Recruiting Internet game is an acquisition play. Companies go public to fund buying sprees that shore up the long term value to shareholders. Watching CareerBuilder's next steps will be an interesting spectator sport.

Note: 1999 was a heady time. With the upcoming Google  and Taleo IPOs, a few of us are waxing nostalgic. The Reuter's critiques remain valid today...the technology is not quite there.

John Sumser

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