Omnicom Group surprised industry watchers with a solid first quarter, while Interpublic Group of Cos. and WPP Group showed effects of a weak advertising market.
Interpublic late April 26 recorded a net loss of $38.4 million, or a loss of 12 cents a share, in the first quarter after taking a $160.1 million write-down of interactive investments, including a stake in bankrupt MarchFirst that dated to its early investment in predecessor CKS Group. Interpublic added $827 million in new business in the first quarter.
Wall Street moved quickly to punish Interpublic. Several analysts cut their earnings estimates for the year.
Interpublic stock dropped April 27; at mid-afternoon, it traded at $32.50, down 10% and near its 52-week low.
Interpublic revenue will grow in "single digits" in the second quarter and then in the second half will show "double-digit growth" Chief Financial Officer Sean Orr said in a conference call with analysts.
"We're being much more realistic about the outlook for the second half," Mr. Orr told analysts.
Revenue at Interpublic grew just 6% in the quarter to $1.3 billion compared with $1.2 billion in the first quarter of 2000.
Omnicom reported that revenue rose 16% in the first quarter to $1.6 billion from $1.4 billion in the same period in 2000, led by an 18.5% growth in marketing services revenue, which outpaced growth in traditional advertising of 13.2%.
Net income for the quarter rose to $95.3 million from $79.7 million a year ago, and earnings per share rose to 52 cents from 45 cents. Management reaffirmed its guidance of 12% to 14% organic revenue growth and 15% earning per share growth for the full year. Omnicom reported $1.3 billion in net new business last quarter.
Helped by acquisitions, WPP posted a 64% increase in revenue to $1.4 billion in the first quarter, but organic revenue growth-excluding currency fluctuations and acquisitions such as Young & Rubicam-was only 6%. WPP agencies won net new billings of $365 million in the quarter.
London-based WPP management blamed the results on the U.S. economic slowdown, as well as the strength of the U.S. dollar and other foreign currencies against the British pound.
WPP's marketing communications revenue rose faster than traditional advertising; public relations revenue rose 116.9% and healthcare and specialist communications grew 83.3%, while advertising and media revenue grew 64.2%, all adjusted for currency.
"Coming into the second quarter, we continue to win business, but there appears to be fewer and fewer accounts that are in review," Omnicom Chairman-CEO John Wren said in an conference call. He blamed the slowdown on clients' concerns with balancing their books during a tough first quarter.
"Going through the trauma of changing your marketing or advertising partner is not your first priority in this kind of environment," said Mr. Wren.