* Omnicom Q3 EPS $0.53, matching estimates
* Q3 revenue $2.84 bln vs estimates $2.86 bln
* Sees stable climate, little sequential improvement in Q4
* Seeking acquisitions in Middle East, India, China
* Shares down 3 percent
(Adds executive comments from conference call)
By Franklin Paul and Paul Thomasch
NEW YORK, Oct 21 Omnicom Group Inc (OMC.N)
reported a 22 percent fall in third-quarter earnings as a big
drop in spending by key advertising clients, like Chrysler,
badly hurt revenue -- and will likely do so again in the fourth
Executives at Omnicom, home to a network of advertising and
media agencies including BBDO Worldwide and DDB Worldwide, did
offer a somewhat brighter assessment of 2010, however. While
spending remained depressed, it had at least stabilized and
should pick up slowly next year, they said.
"At this point spending levels from our existing clients is
best described as generally stable, with a few exceptions to
the positive, which are mostly in the United States, and a few
exceptions to the negative which are mostly in Europe," Chief
Financial Officer Randy Weisenburger said on a conference
Among the businesses where spending appeared most
depressed, Weisenburger pointed to auto advertising, sports and
event marketing, and recruitment marketing.
The decline in client spending more than offset Omnicom's
cost-cutting efforts, driving net income down 22 percent to
$165.6 million, or 53 cents a share, which was in line with
Overall, revenue declined 14 percent to $2.84 billion, just
shy of the $2.86 billion average analyst forecast, according to
Thomson Reuters I/B/E/S.
Organic revenue, a closely watched industry benchmark that
excludes foreign currency fluctuations and recent acquisitions,
fell 10.7 percent.
While Omnicom's shares dropped 3 percent after the results,
at least one analyst, JPMorgan's Alexia Quadrani, said she was
encouraged by the quarter.
"Importantly, the third quarter did not show any further
deterioration from the second quarter, which is consistent
with our belief that the ad market has bottomed and we should
see some improvement -- albeit on easier comparisons -- in the
fourth quarter," Quadrani told clients in a note.
Omnicom executives also pointed to easier comparisons in
the fourth quarter from a year ago, but conceded that business
was unlikely to improve much before 2010.
One reason is Chrysler, which has severely cut back on
splashy advertising campaigns. "Is it possible that the auto
sector will continue to have a drag as we go into the next
quarter?" Omnicom Chief Executive John Wren asked. "I expect
so, but probably to a decreasing amount as you go into 2010."
Wren added that Omnicom's agencies were "engaged in a
number of other pitches for other auto-makers, and we're fully
expecting to win our fair share of those pitches."
He also said that as business begins to improve, the
world's largest advertising services company would be back on
the prowl for acquisitions. Specifically, he said Omnicom would
be interested in agencies in the Middle East, China and India
as well as "sensibly-priced" digital deals.
Second to acquisitions, Wren said Omnicom would consider
buying back stock, which has climbed 45 percent this year,
outperforming the broader market.
On Wednesday, shares of Omnicom fell $1.16 to $36.91 on the
New York Stock Exchange.
(Reporting by Franklin Paul and Paul Thomasch; Editing by Lisa
Von Ahn, Dave Zimmerman)