("Interpublic 3Q Profit Down 47% On Lower Revenue, Margins,"
published at 7:16 a.m. EDT misstated the company's domestic revenue
drop due a rounding error. A corrected version follows.)
Interpublic Group of Cos.' (IPG) third-quarter profit fell 47%
as the advertising giant continued to cut costs with its revenue
tumbling further, although results were above analysts'
expectations.
The ad industry has been hit hard by the global recession.
Improved sentiment in the world economy hasn't translated to rising
orders, and clients are getting used to paying lower fees as ad
firms look to retain their business. Interpublic and its rivals
have responded by cutting jobs, as salaries typically represent a
bulk of an agency's expenses.
On Tuesday, French ad giant Publicis Groupe SA (PUBGY, PUB.FR)
posted a 7.4% drop in third-quarter organic revenue, but noted
gradual improvement in the quarter, while Omnicom Group Inc. (OMC)
last week posted a 23% profit decline.
Interpublic Chairman and Chief Executive Michael I. Roth said
client sentiment has stabilized, but noted the company remains
cautious, making it difficult to predict what growth will look like
next year.
Interpublic, the parent company of DraftFCB and McCann-Erickson,
posted earnings of $24.1 million, or 3 cents a share, down from
$45.7 million, or 8 cents, a year earlier.
Revenue dropped 18% to $1.43 billion. It was down 13.5%
domestically and 24% abroad. Organic revenue, which excludes
currency changes and acquisitions, decreased 14%.
Analysts surveyed by Thomson Reuters expected earnings of a
penny on revenue of $1.42 billion.
Total operating costs were down 16%. Over the past year, the
company has reported about $143.3 million in severance costs
related to cutting about 5,100 employees, or 11% of its work
force.
Operating margins fell to 4.1% from 6.7%.
Shares closed Tuesday at $6.11, and were inactive premarket. The
stock is up 54% this year.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com