Interpublic Group (IPG) may be out of breath

Interpublic Group of Companies, Inc. (Public, NYSE:IPG) posted a larger Q1 loss today and missed estimates with their international sales division. Shares of Interpublic are falling 8% today which makes today the worst drop they’ve experienced in the past four years.

According to their company website:
From McCann to Lowe, from Jack Morton to R/GA, the companies of Interpublic add color to local and global brands and breathe life into their relationship with consumers.

However today, they are hardly "breathing" life into their company shares which are down $1 to just under $12 a share. On a day like this, maybe an oxygen tank could help or better yet some smelling salts to get management back on their feet.

Interpublic reported their Q1 07 loss narrowed to $125.9 million, or 29 cents a share, from a loss of $170.2 million, or 43 cents, a year earlier. They were able to raise their sales 2.4% to $1.36 billion but when your losses from 2003 to 2005 total to $1.3 billion, nobody really cares – and it shows today.

Fitch Ratings upgraded Interpublic today citing a diverse client base, ample liquidity, and the progress made toward winning new accounts and driving organic growth from existing clients. They went on to say:
"Credit metrics have improved significantly from 2005 levels, and are expected to continue to improve in 2007 and 2008. The rating incorporates the risk that a pending SEC investigation could potentially result in a cash outflow."

Interpublic has been around since 1961,and is comprised of hundreds of communication agencies around the world that "deliver custom marketing solutions on behalf of their clients." Looking back over the past 5 years IPG stock’s performance has not been very impressive. Its had a hard time getting past $15 a share and long gone are the days of $30 per share. So if investors aren’t impressed by today’s results, do you really think the stock will get above $15 this year?

But the "companies of Interpublic add color to local and global brands". That maybe so, but the only color Wall Street cares about is green money, better get more oxygen.

Frank Lara Jr.

Frank Lara Jr. can be reached at [email protected]; he does not own securities in the companies he covers.