Interpublic Group made it clear last week that the "engine that drives" it is broken. In announcing the holding company's dismal 2002 results, new CEO David Bell said McCann-Erickson WorldGroup has "temporarily lost its way financially."
Sources said WorldGroup's profit was off nearly 50 percent last year. IPG will not discuss details, but when it unveiled its earnings shortfalls last week, executives laid the blame on McCann and Octagon.
Fourth-quarter 2002 results were particularly bad: Net income plummeted 79 percent, to $20.3 million, and revenue slid 4 percent, to $1.6 billion. For the year, revenue fell 9 percent, to $6.2 billion.
Bell said new WorldGroup CEO John Dooner has to get the house in order. Last week, Dooner held "informational" meetings with CFO Art D'Angelo, controller Joe Studley, new-business head Margie Altschuler, and worldwide creative leaders Jonathan Cranin and Marcio Moreira. Dooner is stressing four fundamentals: new business; building on current client relationships; improving creative worldwide; and making the numbers.
Sources predicted swift management changes in the coming weeks. One is that Gunnar Wilmot, who followed Dooner to IPG, will leave the holding company to take an operational role within The Partnership.
lnside McCann, there is a quiet uncertainty. In last week's conference call, IPG CFO Sean Orr noted that "people costs remain too high," adding that IPG will reduce head count throughout all its companies "until revenues stabilize."