The CEO of WPP Group was referring to the slightly upbeat forecasts given earlier in the week by Robert J. Coen,
"We have seen nothing yet to show a reduction in the rate of downturn," said Mr. Sorrell, whose holding company was hit hard by the market during its long battle with Havas Advertising to acquire Tempus Group.
The deal was settled finally in WPP's favor last month, although the company will be paying more than twice Tempus' market value. According to one analyst, Tempus will cost WPP almost 5% of its market cap, which currently stands at $10 billion.
WPP's share price dropped to a 52-week low of $6.07 while the shop balked on the Tempus deal, claiming that "material adverse changes" made it impossible for it to follow through on its offer of approximately $630 million. When a U.K. takeover panel refused to allow WPP to pull out and the company acquiesced, shares went up. At yesterday's market close in London, the price was $9.60.
In his presentation at the conference, Mr. Sorrell said that the union of Tempus' CIA media network with WPP's Media Edge is a strong long-term investment that will improve WPP's media presence in Europe.
Predicts WPP growth
Despite the gloomy outlook, Mr. Sorrell predicted that overall growth for WPP will be 15% in 2002, 15.5% in 2003 and 20% "in the longer term." This growth will be achieved, Mr. Sorrell said, by focusing less on advertising and more on faster-growing opportunities in research, consulting and media.
While admitting that custom research suffers lower margins, "semi-syndicated" research enjoys higher margins. "We are still in the advertising business," said Mr. Sorrell, but he predicted that there will be more growth in research and direct marketing sectors.
This year, as in previous years, Mr. Sorrell gave the investor conference yet another definition of the nature of his business. He has chronically shied away from referring to WPP as an advertising holding company. Last year, he claimed WPP was a talent agency because it provided the services of a group of highly creative employees. (Mr. Sorrell also noted that his talent pool shrunk this year from 5,300 employees to 4,950.)
This year, he said, "we are a differentiation business." By this he meant that the advertising agencies, research companies, media agencies and consultancies WPP owns are in the business of creating unique brand identities -- differentiation -- for products and services, something that is sorely needed as companies continue to consolidate.
Dry joke about Sept. 11
Early in his presentation, Mr. Sorrell made what sounded like a very dry joke. "I will talk today about Sept. 11, which I still believe was a material adverse change," he said, alluding to his ill-fated attempt to pull out of the Tempus deal. There were a few laughs. Mr. Sorrell did not even crack a shadow of a smile and then moved on.