Microsoft’s Investment in CareerBuilder Combines Local, Global Ambitions
Important Details: Microsoft moved to take a small seat at the recruitment table, acquiring a 4% stake in CareerBuilder (CB). CB is the largest U.S. recruitment site by listings, by unique visitors and by U.S. revenue, though Monster Worldwide has an edge in revenue globally. The third contender in the largely three-horse race has been Yahoo! Hot Jobs, which has been recently bolstered by a partnership with major U.S. dailies, bringing more than 400 cities into the fold.
At a valuation of about $1.5 billion (arrived at last summer when McClatchy reduced its stake and those of founders Gannett and Tribune both increased), the Microsoft investment would be in the range of $60-70 million. It leaves Gannett and Tribune with stakes of 40.8% each and McClatchy with 14.4%. The investment comes in tandem with a renewed contract (in which CB will pay as much as $443 million for placement) with MSN to be the exclusive recruitment provider through 2013.
CB CEO Matt Ferguson explained that the investment means that CB can increase its reach into Europe and beyond, using MSN’s non-North American portals, and profit from Microsoft’s technology. “Microsoft’s equity stake builds on this successful relationship and establishes a global alliance with one of the world’s most ubiquitous technology powerhouses,” he said. “It enables CareerBuilder to continue to grow faster in the U.S. than any other job site while leveraging a strong international platform to quickly enter new markets in Europe and all over the world.”
Implications: The move is another affirmation that global reach is an increasing priority. In a world of six billion people, in which only one billion are online, the growth potential is staggering. It’s noteworthy that this investment comes within a week of News Corp.’s offer for Dow Jones, spurred in part by News Corp’s plan to establish a leading worldwide presence, on cable and internet, in the business/finance space.
While global, the Microsoft buy-in also may have an interesting local application. With estimates that as many as 40% of searches may be locally oriented, Microsoft has acknowledged missteps in that area. Clearly, it’s behind the curve in both algorithmic and paid search, and it blew an earlier moment, according to CEO Steve Ballmer. Ballmer told the New York Times in January that it missed an opportunity when it sold off its ahead-of-its-time online city guide service in 1999. “…. Sidewalk was really aimed at what we now call local search. Sidewalk is one we should not have gotten out of.”
Three words define this deal: technology, global, equity. The first two are clear. The new equity partner’s deep pockets may also come in handy as increasingly cash flow-challenged news companies need cash for acquisition, marketing and product development. Above all else, as recruitment competition heats up, it doesn’t hurt CareerBuilder to have a friend in Redmond.