NEW YORK Interpublic Group today reported a net loss of $578 million for the third quarter, due mainly to steep charges in two divisions: The Partnership, which includes Lowe and Draft, and the Constituency Management Group, which encompasses public relations, branding and event marketing shops.
The write-down at The Partnership amounted to $310 million, while the charge related to CMG was $132 million, IPG said.
The loss, which equals $1.40 per share, came despite worldwide revenue growth of 6 percent for the quarter, fueled by the performance of units in the U.S. and Asia. And, for the sixth straight quarter, IPG achieved sequential improvement in organic revenue growth, which was up 1.8 percent from the same period in 2003.
"Our results this quarter are decidedly mixed," said IPG CEO David Bell, during a conference call with industry analysts. "We're still moving in the right direction but, in keeping with our past comments, we've said that progress would not always be linear."
In particular, Bell cited performance problems at Lowe and IPG's media units. IPG recently installed a new worldwide CEO and worldwide chief operating officer at Lowe, and Bell said the company plans to add new leaders in media.
Other factors contributing to the loss were the rising cost of professional service firms that IPG is using to comply with new federal accounting standards, and higher personnel costs, due mainly to new hires at McCann Erickson and an acquisition at Hill, Holliday, Connors, Cosmopulos, which increased IPG's headcount by about 100, IPG CFO Bob Thompson said.