NEW YORK (AdAge.com) -- Faced with accounting issues that have delayed the filing of its annual report, Interpublic Group of Cos., in an unusual move, today released a preliminary and unaudited look at its 2004 financial results.
Cloud Over IPG Darkens
Possible New Financial Restatements and Extensive 'Material Weaknesses' Revealed
Interpublic Delays Release of Earnings Report
Cites 'Items That May Require Adjustments'
IPG Names Michael Roth New CEO
David Bell Moves to Co-Chairman
Former IPG Sports CEO Nears Deal With Talent Agency
Mark Dowley in Talks With Endeavor to Bring in Ex-Clients
S&P Cites 'Negative Implications' for IPG
May Downgrade Holding Company's Credit Rating Further
Interpublic to Settle Shareholder Lawsuits
Company Will Pay $115 Million in and Stock
Lawsuit Alleges 'Accounting Manipulations' at Interpublic
Current and Former Top Executives Named as Defendants
IPG Restructuring Charges Higher Than Predicted
CEO Tells Analysts That Reorganization Process Is 'Messy'
David Bell Named Interpublic Chief
John Dooner Steps Down, Will Return to Head McCann-Erickson WorldGroup
IPG Executives Give Back 1.2 Million in Options
CEO David Bell Defends John Dooner Pay Package
What Sank John Dooner
Lack of Experience and Financial Naivete, Say Analysts
Interpublic Stock Hits 10-Year Low
Analysts Say New Credit Agreement Less Harsh Than Expected
Standard & Poor's Issues Interpublic Debt Warning
Cites Possibility of Junk Status Rating
Interpublic Exec Is Selling His IPG Stock
David Suissa Files to Sell 69,995 Shares
SEC Launches Formal Probe of IPG Accounting
Focus Includes Five Years of Earnings Statements
Status of Some IPG Debt Reduced to Junk
Further Rating Downgrade Possible
Interpublic Reports SEC Inquiry
Feds Begin 'Informal' Action; CEO Says He Is 'Embarrassed'
Analysts Lose Faith as Interpublic Stock Tumbles
Shares Drop 30% Following $120 Million Earnings Restatement
Interpublic Slashes Profit Forecast
Nearly Doubles Earnings Restatement to $120 Million
The third-largest marketing holding company said its revenue last year was $6.2 billion, up 5.8% from 2003, in papers filed with the Securities and Exchange Commission. The filings cautioned that this number, along with other financial data provided, may be revised because of the current accounting probe the company is undertaking. The company gave no indication as to when it will file an audited version of its 2004 results.
The holding company also estimated an operating loss of $285 million.
Interpublic's stock price was up more than 5%, to $12.95, during early trading today.
Wave of bad news
Since revealing last month that weaknesses in its internal controls were preventing the release of year-end results, Interpublic has been swamped by a wave of bad news. On the same day it announced the possibility of earnings restatements stemming from its period of heavy acquisitions that ended four years ago, General Motors, the company's largest client, said it was reviewing its $3.5 billion media-buying account. The developments came just months after interpublic named as chairman-CEO Michael Roth, who is expected to guide the company through its turnaround process that could extend into 2006 (it began in 2003).
In a conference call with financial analysts today, Mr. Roth mounted a defense of the company's agency brands, which include McCann Worldgroup, Foote Cone & Belding and Draft Worldwide. In particular he pointed to recent account wins -- Computer Associates, Nokia and Intel -- that attest to "our stable of great brands."
Mr. Roth also strove to distinguish the holding company's financial problems from the agencies it owns.
"The tone of the businesses is strong," he said. "We have great brands in the marketplace."
Audited or not, the results were less than inspiring. Overall, Interpublic reported modest gains in organic growth and organic revenue. In the U.S., revenue rose 4.4%. Internationally, revenue increased 7.5% but the company saw decreases in organic revenue and organic growth, which it blamed on Lowe Worldwide, a struggling ad agency network currently in the midst of reorganization.
In contrast to top rivals
Based on this unaudited picture, Interpublic's performance stands in contrast to its larger rivals, Omnicom Group and WPP Group, whose 2004 results indicated that both companies had shrugged off the vestiges of the recession. Omnicom's revenue rose 13% to $9.7 billion and the acquisitive WPP saw its revenue grow 17% to $7.9 billion. Both also saw substantial gains in profit. Interpublic today did not give any hint as to its net income in 2004.