IPG Swings to a Profit for '07, Continuing Turnaround

WPP Also Ends Year on a Positive, Touting Record New-Business Wins

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NEW YORK (Adage.com) --- Turnaround efforts at Interpublic Group of Cos. are moving forward, with the holding company swinging to a profit last year, reporting a net income of $131.3 million compared to a net loss of $79.3 million in 2006.

In a call announcing fourth-quarter and full-year results, Interpublic CEO Michael Roth credited the improvement in profitability to organic revenue growth and cost control. He also pointed to a large number of media wins, including Hyundai and Cadbury Schweppes, and investment in talent at agencies McCann Erickson, Momentum and MRM.

Organic revenue
Full-year revenue for the holding company was $6.55 billion, compared to $6.19 billion in 2006. Organic revenue, a metric that discounts the impact of acquisitions and currency fluctuations, increased 3.8%.

Interpublic has been struggling for years with a host of accounting and client-related problems. In 2008, the company is targeting organic-revenue growth of 4%-5%.

Organic-revenue performance was down slightly in the fourth quarter compared to the second and third quarters of 2007, but Mr. Roth said the holding company sees no evidence of a pullback in 2008.

Mr. Roth also said the holding company has achieved compliance with the Sarbanes-Oxley Act this year.

WPP's new billings
Meanwhile, rival holding company WPP Group reported a 5% increase in revenue this year to $12.3 billion. Profit for the holding company was up 7%, with net income at $925.9 million.

Buoyed by the win of AT&T and Dell, the holding company reported record net new billings, with total billings for the year up more than 5% to $63 billion. The company said media investment management continues to show the strongest growth of all its services, with growth of 14% this year.

WPP continued its focus on emerging markets, with the fastest growth reported in Asia Pacific, Latin America, Africa, the Middle East and Central and Eastern Europe.

Though Chief Executive Martin Sorell was optimistic about the prospects for 2008, he said WPP is bracing itself for 2009, when a slow down in the economy will be "hard to avoid" because a new U.S. president will be in office and the economy in China may be sluggish after the stimulation of the Beijing Olympics this summer.
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