WPP’s, OMC’s 3Q Raises Hopes For IPG

Strong industry profit reports last week lifted expectations for Interpublic Group, which releases its third-quarter numbers Wednesday.

“Given the results of Omnicom and WPP, there’s more confidence in industry improvement, so there could be a pleasant surprise from IPG,” said Alexia Quadrani, a Bear Stearns analyst. However, she did not rule out unpleasant surprises either. “A lot of things are happening at this company. It’s a turnaround in progress and, while there are encouraging signs and they’ve made steps forward, it’s still a very complicated, long process.”

Last week, Omnicom said third-quarter revenue rose 14 percent; WPP reported a 3.7 percent rise. Thomson First Call, reflecting consensus estimates, expects IPG to report a 1.6 percent revenue increase to $1.4 billion and profits of 3 cents a share, compared with a year-earlier loss of 85 cents a share.

One financial observer plays down the company’s current EPS forecasts. “Earnings per share is less relevant at this company right now because of one-time charges which are going to affect it,” he said. “What’s relevant is organic revenue growth. The market needs to see some sequential improvement, particularly relative to peers like Omnicom and WPP.”

Wall Street seems to have adjusted well to the unexpected departure of Chris Coughlin, the former COO and CFO brought in to help engineer IPG’s turnaround. At the time, IPG said Michael Roth, former CEO of The MONY Group and an IPG board member since 2002, would become chairman, working with CEO David Bell. He has wasted little time in making his presence felt. “He’s been very proactive in settling up a meeting with me, and I think he’s an asset,” Quadrani said. “Apparently he’s assuming an unofficial role as COO at IPG, which is a bit different than a lot of chairmen.”