IPG Suffers $100 Mil.+ Net Loss for 3Q

NEW YORK Interpublic Group on Wednesday reported a net loss of nearly $102 million for the third quarter of 2005, or 24 cents a share, an improvement over the same period last year, when the loss was about $502 million, or $1.21 per share.

For the first nine months of the year, IPG also reported a net loss, which totaled approximately $240 million. That too was down from last year’s net loss for the same period, which was about $684 million, or $1.65 per share.

IPG attributed the losses to client exits, flagging revenue and increased costs, such as in professional fees related to its accounting problems.

For the third quarter, revenue fell 5 percent compared to the same period last year, to $1.44 billion, and for the first nine months of 2005, revenue also was down slightly (less than 1 percent) to $4.39 billion.

During a conference call today with industry analysts, IPG CEO Michael Roth and CFO Frank Mergenthaler stressed that while the company is still grappling with its internal financial controls, its operating units remain focused on margin improvement and organic growth. In the third quarter, organic revenue dipped nearly 3 percent and, for the first nine months, it was flat. Roth expects organic revenue to be “down modestly” for the full year.

“We can and must do better than this,” Roth said. “We have taken steps to improve our growth prospects by making management changes and upgrades at a number of our key operating units. We continue to experience a good deal of success in attracting top talent to our companies.”

Among the top hires Roth mentioned were Steve Blamer at Foote Cone & Belding, Brett Gosper at McCann Erickson and Nick Brien at Universal McCann.

Growth will be particularly important in the first of half of 2006, when the impact of major 2005 losses such as Bank of America and General Motors’ media duties will be fully felt, Roth said. In fact, Roth, who previously told analysts that the transition of some of BofA’s business to Omnicom Group could take up to six months, acknowledged on Wednesday that nearly all of the revenue will be gone by year’s end.