News Analysis: Opportunity abounds for Bell, Dooner

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Wall Street is smiling, at least for now. David Bell is a proven CEO who knows how to manage bottom lines and expectations, while John J. Dooner Jr. will focus on his strong suit of directing an agency and clients. The stock could rebound as Interpublic regroups and the business cycle inevitably turns up. The sad story of Interpublic could still have a happy ending.

But Interpublic Group of Cos. must first overcome daunting challenges involving finances, operations and even its business model's structure and relevance if Mr. Bell-who insists his appointment is no interim move-is to lead a comeback.

Mr. Bell has the advantages and disadvantages of an insider. He knows the turf but doesn't have the freedom of an outsider who comes in with the mandate to reshape a fallen leader. Interpublic's board didn't make things easier by keeping the ex-chief on the board, which could make it harder for Mr. Bell to lead frank discussions about what he wants to do differently.

Mr. Dooner showed leadership a year ago in removing all board insiders except the chief executive and chief financial officer, assuring that partisan division interests would stay outside. With Mr. Dooner's shift to McCann-Erickson WorldGroup, Interpublic again has an operating chief on the board.

daunting task

Mr. Dooner faces his own daunting task as he must set aside ego and failure to focus on the imperative of reinvigorating Interpublic's flagship. His agency acumen is undeniable, but it is up to Mr. Dooner to prove that the unorthodox move can work, and that the decision to keep him around won't ultimately be judged another failed boardroom experiment.

Interpublic is hardly out of the woods. Its stock sputtered a day after the Feb. 27 move, closing down 5 cents at $9.65. But Interpublic for the first time since Philip H. Geier stepped down in late 2000 has a CEO that Wall Street believes in.

"Thank God they finally did something," said Lauren Rich Fine, analyst at Merrill Lynch. "David Bell is an excellent choice."

Alexia Quadrani, a Bear, Stearns & Co. analyst, recalls Mr. Bell from his time running True North Communications: "He was responsive, accessible. He delivered largely on the expectations that he set out."

Therein lies opportunity. Mr. Bell's appointment went a long way toward fixing Interpublic's strained credibility with the Street, which buys time to fix the company.

Mr. Bell does not have the financial background of Omnicom Group President-CEO John Wren, who once worked at Arthur Andersen, or WPP Group Chief Executive Martin Sorrell, famous for his distillation of agency finance. But, said Ms. Quadrani, "If he has a strong financial team behind him, not having that type of background should be fine." Interpublic likely will replace Chief Financial Officer Sean Orr, helping its case with Wall Street.

reason to sell

From a liquidity standpoint, Ms. Fine and Ms. Quadrani agree, Interpublic does not need to sell assets beyond the ventures-NFO WorldGroup, race tracks-already on the block. But there is another compelling reason for Mr. Bell to sell: to streamline an unwieldy enterprise built on hundreds of acquisitions.

"If you were to divest or write down businesses that weren't working, and the end result was a smaller IPG but a more profitable one, Wall Street would support the move, Ms. Quadrani said.

"It's nice to have some good news coming out of IPG," she added. "Let's hope it's sustainable."

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