Bolstered by an $80 million tax benefit and increased spending by existing clients Microsoft, the U.S. Army, Sony and Merck, the third-largest agency holding company posted 6.6% organic revenue growth in the second quarter. Interpublic reported revenue of $1.65 billion for the second quarter of 2007, up 7.8% from the same period last year.
Net income for the quarter was $137 million, or 27 cents per basic share, compared to net income of $65.7 million, or 10 cents per basic share, a year ago. The 2007 period includes a significant net reversal of tax reserves.
"Our second quarter saw Interpublic perform [at] the highest level in many years," Michael Roth, chairman-CEO, said in a conference call with investors this morning.
He pointed to second-quarter earnings as proof that the company's turnaround efforts, expected to be complete in 2008, are having a positive effect. "The organic revenue growth of 6.6% this quarter is a terrific indicator of how much of a difference the right people in the right service offerings can make," he said.
But Mr. Roth also warned investors about being too optimistic about the report, with the company still recovering from the losses of its GMC and Buick accounts, and more investments needed to accommodate the "growing digital component of the business."
Mr. Roth stopped short of indicating that the strong performance could be expected to continue in coming months. "We would caution you against using the second quarter's very strong results to extrapolate performance for the balance of the year," he said.