IPG’s Net Income Fell About 50 Percent in the 3rd Quarter

NEW YORK — Net income at the Interpublic Group of Cos. dropped almost 50 percent in the third quarter of 2001, compared to the same period in 2000, IPG reported Tuesday.

Net income, excluding non-recurring costs, amounted to $54.5 million in the quarter, compared to $107.7 million in 2000, IPG said. Revenue during the same quarter was down 7 percent, from $1.7 billion to $1.6 billion.

While total revenue was down, revenue outside the U.S. was up almost 6 percent. The U.S. figure, however, fell by nearly 16 percent.

Incorporating the non-recurring costs, IPG posted a $477 million net loss for the quarter and a $616 million net loss for the first nine months, compared to the same periods last year. The costs are related to the recent reorganization of IPG, the integration of True North Communications and other cost-cutting initiatives.

IPG CEO John Dooner attributed the decline, in part, to a falloff in client spending after the terrorist atttacks of Sept. 11. In dollar terms for the quarter, CFO Sean Orr estimated the impact at $35 million.

For the first 9 months of 2001, IPG reported net income of $248 million before non-recurring costs–down from $379 million in the same period last year–and revenue of $5 billion (also before non-recurring costs)–down from $5.1 billion in 2000.

IPG revealed its numbers at 4 p.m. today, a half-hour before Dooner and Orr addressed industry analysts and investors.

The results announcement, originally scheduled for the fourth week of October, was posptoned to this week, so as to give IPG “additional time to review the one-time charges and provide supplemental disclosure.” [Adweek, Oct. 22]. Several analysts complimented IPG on the clarity of its report.

News of financial results comes on the heels of a decision by Moody’s Investors Service to downgrade IPG’s “senior unsecured debt ratings” and “subordinated debt rating.” In announcing the move last week, Moody’s said, “The outlook for the long-term debt ratings remains negative,” noting that last August the company changed IPG’s debt rating outlook from stable to negative, “primarily due to our expectations for deteriorating operating results from the weakening advertising environment.”

The third-quarter numbers also surface as IPG finds itself in a legal battle with former client PepsiCo, which shifted an estimated $350 million in billings to Omnicom last month.