Yahoo has a pretty strong hand. They have an offer that's a good mix of cash and stock

Lanny Baker Salomon Smith Barney

Yahoo has suffered from a severe drop in online advertising revenues and is trying to build up other lines of business.

TMP, the parent of Monster.com, agreed in June to purchase HotJobs, the second largest online recruiter in one of the fastest growing online consumer businesses.

But the deal has been held up by US Federal Trade Commission's antitrust inquiries.

Falls in TMP's share price means its all-stock deal, initially valued at $460m, is now only worth $366m.

"Yahoo has a pretty strong hand. They have an offer that's a good mix of cash and stock," said Lanny Baker of Salomon Smith Barney.

Career path

Yahoo Careers has two million resumes but has not generated the same revenues as TMP and HotJobs.

Unlike online retailing, recruitment does not carry large stock holding costs and appears to be a business suited to the internet.

"The career advertising and classified business is a large and growing marketplace that lends itself perfectly to our strategy," Mr Semel said during a conference call.

Mr Semel estimates some $1bn of the $10bn jobs classifieds market is being spent online.

HotJobs charges employers and recruiters to list job vacancies and to access its database of resumes.

Founded in 1997, HotJobs lost $21.2m in the first nine months of this year on revenue of $92.6m.

Opening shots

Mr Semel said his contact with HotJobs chief executive Dimitri Boylan were "cordial" but would not confirm whether Yahoo's bid would turn hostile if its offer was rejected.

HotJobs said late Wednesday its board had agreed to talks with Yahoo, but added that its agreement with TMP remained in effect.

TMP responded to Yahoo's offer by reasserting their commitment to buying HotJobs.