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Analysts: 'Don't Expect Too Much'

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Wall Street analysts have lowered their expectations as agency holding companies prepare to release third-quarter financial results this week.

Of particular concern is Interpublic Group, but all agency holding companies are expected to feel the effects of a sluggish economy and the impact of the terrorist attacks of Sept. 11.

Even Omnicom Group's "unique positive trading pattern around quarterly earnings releases . . . will be put to the test in Q3 given the heightened level of uncertainty across the media landscape," said Salomon Smith Barney, in an Oct. 18 report.

Analysts have lowered their estimates of Omnicom's earnings per share from $0.55 to between $0.48 and $0.51. Lehman Brothers analyst Kevin Sullivan noted, "Omnicom would have met our previous expectation . . . if not for the disruption in business associated with the attacks."

Credit Suisse First Boston lowered its IPG estimate for 2001 and 2002, based on a "more detailed analysis of the financial impact of recent events." An Oct. 17 report adds, "While we do not think IPG will be the stock to lead the way out of the downturn, we strongly believe the large valuation gap with Omnicom and WPP will narrow over the next year."

IPG had delayed its third-quarter results announcement until Nov. 13, citing the need for "additional time to review the one-time charges and provide supplemental disclosure."

Despite IPG's gloomy out look, Sullivan considers CEO John Dooner to be "a victim of circumstance" who "hasn't been at the helm long enough for anyone to say he led IPG into these problems."

As for WPP, Lehman expects organic growth to slip for the first nine months of 2001 and be flat for the year. Lehman's report takes note of WPP's attempt to invoke a "material adverse change" condition in its bid for media shop Tempus, since the offer now seems "very high."

The Credit Suisse report said IPG will likely remain vulnerable to "the predatory advances of Omnicom and WPP, trying to capitalize on the turmoil at IPG by dislodging its accounts."