When Bcom3 launched plans to go public a year ago, company officials acknowledged that an IPO was the only way to compete with better-financed rivals and avoid being "marginalized."
With the Chicago company's decision last week to postpone its stock offering because of a softening economy and an inhospitable market, the company again faces the same questions it had hoped to put to rest.
"From a strategic standpoint, they will have to do something in the next year-and-a-half or they'll become further marginalized," said Chris Hansen, senior advertising analyst at Banc of America. "They either need to build out their below-the-line capabilities, or they need to combine with someone larger."
Bcom3 CEO Roger Haupt said the company remained "fully committed" to pursuing an offering, but declined to map out a new timetable. "I wouldn't want to engage in speculation," he said.
The IPO was expected to raise $4-5 billion. It's delay until at least next year renewed suggestions that Bcom3 could be a takeover target.
Dentsu, which owns 20 percent of Bcom3, is expected to go public later this year in Japan. Sources have suggested that the Japanese company would use the cash to purchase the remainder of Bcom3.
Haupt said there were contractual limits concerning how much of Bcom3 Dentsu could own once the company is public. He would not comment on whether those limits applied to Bcom3 as a private entity.
Analysts agreed that delaying the IPO was a logical move considering the softening economy. So far this year, 80 companies have withdrawn their IPOs, compared with 25 over the same period last year, according to Richard Peterson, a representative for Thomson Financial Securities Data. Bcom3 has not yet submitted applications for an IPO, only saying it planned to file sometime between March and November of this year.
Bcom3's Leo Burnett laid off roughly 200 staffers in February. Though agency executives cited softening client spending and account losses as the reason, sources said the upcoming IPO was a major factor in the belt-tightening.
Haupt dismissed any suggestion Bcom3's fiscal health played a role in the delay, declaring the company's operations to be in "very good shape."
"The more depressed the markets ... the more speculation there has been about what we're doing," Haupt said. "There was no point in leaving a statement out there without indicating where we were going."