Interpublic Group was back in the financial spotlight last week as it reported its delayed third-quarter results and revealed the Securities and Exchange Commission is conducting an "informal inquiry."
During last week's call with analysts, IPG CFO Sean Orr took center stage to report that the numbers for the first nine months of 2002 came out largely as IPG had predicted the week before.
The SEC inquiry into IPG's $181.3 million accounting imbalance began several months ago, after IPG in August first revealed the imbalance, which has since been twice restated. Orr downplayed the inquiry.
Analysts seemed to take the news in stride, albeit with a pinch of skepticism.
"We are not overly flummoxed by the SEC review as, at this stage, IPG's figures have likely been scrubbed clean," wrote Merrill Lynch's Lauren Rich Fine, before noting, "Why do we think we have made that comment before?"
Some observers wondered when the financial situation would prompt some clients to re-evaluate their relationship with IPG. Last week, although it appeared unrelated, one big account went into review, and another was on the bubble [see story on page 2].
Another eyebrow-raising moment during the call came when IPG disclosed that $44 million of the imbalance involved units other than McCann-Erickson WorldGroup, in cluding $30 million in "understated liabilities" at an agency within IPG's Partnership division.
The sole question fielded by CEO John Dooner, patched in from London (where he was visiting clients such as Unilever), was about the status of WorldGroup CEO Jim Heekin, who has come under fire amid the accounting probe. "Our relationship is fine," Dooner said. "I don't think anyone should be worried about Jim—period."
Meanwhile, IPG is said to be in final contract negotiations with a candidate for the CFO opening at WorldGroup, and the hire may get done this week.