IPG's Roth confident on accounts, turnaround

NEW YORK (Reuters) - Interpublic Group of Cos Inc (IPG.N) is optimistic about winning work for key advertising accounts including Unilever and Sony Ericsson, and expects new business to help it meet financial targets this year despite a slowing U.S. economy.

In an interview with Reuters on Thursday, Chief Executive Michael Roth said Interpublic would complete its turnaround in 2008 after three years of regulatory investigations, earnings restatements, client losses and management turnover.

"I believe 2008 is going to be a pivotal year for us. We'll put the question marks away," Roth, who took over as CEO in 2005, said in an interview.

Roth, who previously led a financial services firm and is trained as an accountant, has been working to convince investors that the parent company of ad agencies like Lowe, DraftFCB and McCann-Erickson has turned the corner.

But after several years of restructuring, its stock is still depressed, having fallen about 40 percent in 2007, and it has yet to post consistent earnings or revenue growth.

Even with the stock trading at around $7.50 a share, however, Roth said share buybacks were unlikely this year for the world's third-largest advertising services company.

"Certainly share buybacks are a very important aspect of what I see down the future, but again until we get through 2008, which is a very important year for us in our turnaround, I don't see that happening," Roth said.

While IPG suffered some key account losses last year -- including General Motors Corp's GM.N GMC unit as well as work for Johnson & Johnson (JNJ.N) -- it has also become more competitive in pitches and is landing high-profile work.

This week it won the media buying duties for the $750 million Hyundai Motors America (005380.KS) and Kia Motors account.

Roth said he planned on the company being new business positive for 2008, saying he was optimistic about the outcome of pitches to consumer products company Unilever Plc (ULVR.L) and Sony Ericsson, the mobile phone venture of Ericsson (ERICb.ST) and Sony Corp (6758.T).

"I think we'll be hearing some positive news on the new client side," Roth said, adding that a decision from Sony Ericsson should emerge soon. "We're optimistic about some business at Sony Ericsson."

He added: "The one big client news that is out there that we are waiting momentarily to hear from is Unilever and their ice cream business. There we have McCann, we have Lowe in it, and we're feeling cautiously optimistic that we'll be keeping them as an IPG client."

As for another existing client, Intel Corp (INTC.O), whose media buying business is under review, Roth said the winner should be known in the first quarter.

"I feel, based on what my guys are telling me, that we have a reasonably good chance of retaining that business," he said.

COULD WEATHER DOWNTURN

Roth also said IPG could weather an economic downturn, unless a "dramatic recession" were to hit.

"If there's just a soft landing type of thing we have safety valves within our system," he said. "We have some cushion, if you will, in terms of our budgeting process. There's always other elements we can take a look at on our own spending. So unless it's dramatic, we're pretty much holding to the numbers we have."

Those numbers call for margins of 8.5 percent to 9 percent and competitive growth in organic revenue, a closely watched benchmark that excludes the impact of foreign currency and recent acquisitions.

IPG's organic revenue climbed 5.7 percent in the third quarter, similar to growth at larger rival WPP Group Plc (WPP.L) but lagging market leader Omnicom Group Inc (OMC.N).

Roth said his company had to work harder than competitors to convince Wall Street of its prospects.

"I don't like seeing our stock where it is right now. When you are in a turnaround, when there is negative news it impacts us to a greater extent that some of our peer companies," he said. "On the other side, when we get positive news it doesn't give us the same lift."

(Additional reporting by Michele Gershberg and Yinka Adegoke, editing by Braden Reddall)