WPP also had write-downs from the collapse of the technology sector. According to an unaudited WPP yearend financial report, WPP reported that it wrote down $102 million in tech investments. One loss on its books is Luminant Worldwide Corp., Dallas, a roll-up that Young & Rubicam had invested in before WPP purchased the ad agency.
Y&R sold its i-shop Brand Dialogue, New York, to Luminant for $75.5 million in stock in September 1999 as part of Luminant's public offering. Y&R was Luminant's biggest shareholder, owning 26% of the company, including additional stock Y&R bought and assuming conversion of stock options it obtained. Its stake was worth $355 million at Luminant's November 1999 peak of $52 a share. When WPP bought Y&R in October 2000, the Luminant shares WPP inherited were worth $16.8 million, or $3 a share, and the options were worthless. Since Y&R and WPP never exercised the stock options, WPP ended up with an 18% stake in Luminant when the shop went bankrupt. The stock is trading at a fraction of a cent.
Eric Salama, CEO of WPP.com, the umbrella network, downplays the Luminant investment. Mr. Salama says WPP's overall strategy hasn't changed. "Interactive will grow in importance, and we need to embed it into in all of our operations," he says.