Oct 26 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
"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
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
The company said the impact of last year's losses of
Microsoft Corp and SC Johnson accounts will end in this
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
Analysts on average were expecting earnings of 17 cents per
share on revenue of $1.70 billion, according to Thomson Reuters
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