UPDATE 2-Interpublic joins rivals in warning on slowing growth
Oct 26 (Reuters) - Interpublic Group of Cos, home to advertising agencies McCann Erickson and Draftfcb, missed revenue estimates for the second quarter in a row, with the company warning that growth will slow further this year as clients hold back on spending.
Interpublic shares fell 5 percent in late morning trade to $10.04 on the New York Stock Exchange.
Ad spending generally tracks economic growth, so convulsions to world markets tend to hit shares of advertising firms. Weak euro zone economy, tepid U.S. job creation and slowing growth in China have prompted several media and technology companies to sound a note of caution for the rest of the year.
The broader U.S. advertising index has risen 0.9 percent in the last three months, while the S&P 500 has risen 5.6 percent during the same period.
Interpublic's concerns mirror those of larger rivals Omnicom Group Inc and WPP Plc, who have warned of a slowdown in their biggest markets -- continental Europe and the United States.
"We have seen with respect to all industries ... We have seen caution in terms of expenditures. And, until this macro uncertainty is removed, I think we can't say with certainty what the outcome is going to be," Chief Executive Michael Roth said on a conference call.
While the growth rate will be lower than expected this year, revenue is likely to improve in 2013, he said.
Third-quarter revenue at Interpublic, the second-biggest U.S. advertising and marketing group, fell 3.2 percent to $1.67 billion.
Interpublic's strong growth in emerging economies and in its digital business in the third quarter failed to offset rising caution among clients and loss of some customers, Roth said in a statement.
The company said the impact of last year's losses of Microsoft Corp and SC Johnson accounts will end in this quarter.
Third-quarter net income fell to $68.7 million, or 15 cents per share, from $208.1 million, or 40 cents per share, a year earlier.
Analysts on average were expecting earnings of 17 cents per share on revenue of $1.70 billion, according to Thomson Reuters I/B/E/S.
The company recorded a pre-tax gain of $132.2 million for the third quarter of last year from the sale of half of its 0.4 percent stake in Facebook Inc.
Softness in the pharmaceutical and retail sectors in the second quarter continued into the third, Roth said.
Interpublic shares rose sharply in August after a report that French advertising agency Publicis Groupe was weighing a bid for the company. Publicis later denied the report.
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