Interpublic Cuts Profit Estimates

Interpublic Group of Cos. missed analyst’s first-quarter earnings expectations and issued a profit warning for the rest of the year.

The advertising giant expects to report second-quarter earnings from operations of 40 cents to 45 cents a share and full-year earnings of $1.40 to $1.45 a share. The mean estimates of analysts surveyed by Thomson Financial/First Call were for earnings of 61 cents a share for the second quarter and $1.67 a share for the year.

Interpublic said it “remains committed” to producing double-digit revenue growth this year, but cut its earnings expectations “in recognition of the challenging economic environment.”

The company posted a first-quarter net loss of $38.4 million, or 12 cents a share, compared with year-earlier net income of $42.9 million, or 14 cents a share.

Excluding a $160.1 million charge from investment impairment — which includes the company’s investment in bankrupt Internet consultant MarchFirst Inc. (MRCH), Interpublic said it would have earned $65.3 million, or 21 cents a share, compared with year-earlier earnings from operations of $63.7 million, or 21 cents a share. The mean was for earnings of 22 cents a share.

Revenue rose 6.3% to $1.30 billion. Excluding foreign-exchange fluctuations, Interpublic said the increase would have been 11%. Domestic revenue rose 5.5% to $737.4 million, while international revenue increased 7.3%.

Last month, Interpublic agreed to acquire True North Communications Inc. (TRO) for about $2.07 billion in stock. The deal would make Interpublic the world’s largest advertising company by revenue and a powerhouse in media services. The combined company would have revenue of $7.2 billion, based on reported 2000 results. Interpublic would be a leader not only in advertising, with an enviable roster of clients, but also in media services, health-care marketing, sports marketing, meetings and events, and branding and corporate identity.

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