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Wachovia cuts ad outlook and IPG, Omnicom forecasts
October 9, 2008 / 2:01 PM / 9 years ago

Wachovia cuts ad outlook and IPG, Omnicom forecasts

NEW YORK, Oct 9 (Reuters) - Wachovia Securities cut its outlook for advertising spending on Thursday and said the worsening outlook would mean lower-than-expected earnings and revenue for Interpublic Group of Companies Inc. (IPG.N) Omnicom Group Inc (OMC.N) and MDC Partners MDZa.TO (MDCA.O).

Wachovia analyst John Janedis now expects U.S. advertising spending to fall 0.8 percent in both 2008 and 2009 “based on continued deterioration in the economy, and our belief that things may get worse before getting better.” He previously called for growth of 1.2 percent this year and 1.5 percent next year.

In its updated 2009 forecast, Wachovia said Internet advertising spending would grow at 10 percent rather than 15 percent; magazine spending would drop 2 percent rather than rise 1.5 percent; radio would fall 4.8 percent rather than 2 percent, and newspaper spending would be down 9.8 percent rather than 7.2 percent.

Risks to advertising spending prompted Wachovia to cut its outlook for three large advertising services companies -- Interpublic, Omnicom and MDC -- whose agencies depend on spending from clients for revenue.

For Interpublic, which owns agencies like Draftfcb and McCann Erickson, Wachovia said third-quarter earnings would fall to 4 cents per share on revenue of $1.66 billion.

Omnicom, home to agencies like BBDO Worldwide and DDB Worldwide, would earn 67 cents per share on revenue of $3.35 billion.

MDC Partners, owner of Crispin Porter and Bogusky, would earn 3 cents a share on revenue of $151.9 million.

In early stock market action, shares of Omnicom were up 8 cents at $32.09 and Interpublic was up 19 cents at $6.25, both on the New York Stock Exchange. Shares of MDC were up 31 cents at $6.10 on the Nasdaq.. (Reporting by Paul Thomasch; Editing by Steve Orlofsky)

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