Interpublic makes promises to ease stockholder worries

By Published on .

In an effort to salvage its third-quarter earnings call-which included news of a larger than expected restatement of results-Interpublic Group of Cos. last week told investors it planned organizational initiatives, including a search for a chief operating officer for the holding company. It will also name a new chief financial officer at McCann-Erickson WorldGroup as early as this week.

In addition, executives at the holding company said that about fifteen major "organizational and leadership-related projects" are in various stages of completion.

Finding a chief operating officer for Interpublic, insiders said, is difficult, requiring an executive with both operational and financial experience. "It's a job that should not be perceived as the candidate's last job. The person should have the potential to succeed [Interpublic Chairman-CEO John]Dooner," said an executive familiar with the search.

Mr. Dooner said he and Sean Orr, Interpublic's chief financial officer, "look forward to adding a new colleague that can help us move Interpublic forward."

Interpublic is also seeking an eventual successor to Foote, Cone & Belding Worldwide Chairman-CEO Brendan Ryan, 60. An insider said the company is hoping to hire someone within 12 months to groom for the job. "Do I need a couple of people that can step up and do my job if I get hit by a bus? Of course, it's on my mind," Mr. Ryan said, but denied he plans to retire in the next year.

tough call

In an abbreviated report, Interpublic last week released third-quarter earnings of 2 cents per share, 6 cents below its previous estimate, on $1.5 billion in revenue. A full report is promised Nov. 19. The shortfall resulted from charges at McCann-Erickson WorldGroup related to a bigger restatement of results, Mr. Orr said. The restatement will result in $181.3 million in charges taken across the years 1997 through 2001. "We're confident the process is complete," Mr. Orr said in the conference call.

The restatement and its revisions have bedeviled Interpublic since it first announced on Aug. 13 the discovery of accounting irregularities due to improperly accounted expenses at McCann-Erickson Europe.

The latest market reaction was tame. Interpublic's stock dropped in after-market trading Nov. 13, the day of the restatement news, but rose 6.44% the next day and closed the week up 1.1%.

In this article:
Most Popular