UPDATE 3-Interpublic profit drops; shares down sharply

* Q2 profit 4 cents/shr

* Q2 rev $1.47 bln vs Wall Street view $1.60 bln

* Org rev drop likely consistent in first, second half '09

* Shares drop 11 pct on NYSE
(Recasts first sentence, adds CEO comments, details on organic
revenue, updates share movement)

By Paul Thomasch

NEW YORK, July 28 (Reuters) - Interpublic Group (IPG.N)
reported a sharper-than-expected drop in quarterly results,
sending its shares down 11 percent and making it clear that the
advertising industry's troubles are not yet over.

While Interpublic Chief Executive Michael Roth said
conversations with advertising and media clients suggested that
"the worst is behind us," the picture he painted was in no way
one of a quick recovery.

"Clients continue to be cautious when it comes to
committing resources in such an uncertain environment," Roth
said.

Interpublic, which counts General Motors [GM.UL] as one of
its largest clients, showed the impact of the deep advertising
recession in second-quarter results, with earnings dropping to
$20.9 million, or 4 cents a share, down from $88.1 million, or
17 cents a share, a year earlier.

Revenue for Interpublic, parent to well-known agencies like
DraftFCB and McCann-Erickson, fell by a sharper-than-expected
19.7 percent to $1.47 billion.

Analysts had expected earnings of 10 cents a share on
revenue of $1.6 billion.

Interpublic reported a 14.5 percent drop in organic
revenue, a closely watched industry benchmark that excludes the
impact of foreign currency and recent acquisitions. It said
part of that drop was due to declines in spending from the auto
sector and on events marketing.

So far this year, organic revenue at Interpublic is down
10.5 percent, slightly worse than U.S. rival Omnicom Group
(OMC.N), whose organic revenue is down about 8.8 percent.

CEO Roth said organic revenue should be consistent in the
second half of the year, but that cost savings from job cuts
and other measures should help. In the past nine months,
Interpublic has cut about 4,100 jobs, or 9 percent of its
workforce.

The cost savings, Roth said, should leave it in a position
to significantly improve its profit alongside an economic and
advertising recovery -- one that cannot come soon enough for
the advertising industry.

Other top advertising executives, like Omnicom's John Wren
and Publicis' (PUBP.PA) Maurice Levy, have also said the worst
appears to be behind the industry. While pointing to 2010, both
executives noted in their earnings calls last week that any
recovery in ad spending would likely be modest rather than
explosive.

Shares of Interpublic have risen by around 60 percent this
year, largely on hopes of an advertising recovery. They lost
some ground on Tuesday, dropping 69 cents to $5.50 on the New
York Stock Exchange.
(Reporting by Paul Thomasch and Yinka Adegoke; Editing by Lisa
Von Ahn, Derek Caney and Matthew Lewis)