On March 27, 2006, executives of Interpublic, the giant agency holding company, had, for the first time, a daylong meeting with Wall Street. The intent was to reassure nervous investors that Interpublic was finally turning around after almost four years of struggling with serious financial and operational problems.
On Tuesday, Interpublic, which owns agencies like Huge, Mullen and Weber Shandwick, held its second such meeting, which was, like the first, called Investor Day. More than 200 stock analysts, shareholders, hedge fund managers, executives from rating services and reporters attended the follow-up, at the Times Center in Midtown Manhattan.
This time, the purpose was to report on Interpublic’s considerable progress since the first meeting and declare confidently that additional ambitious goals could be met.
One such goal is continuing to improve profit margins at Interpublic, the world’s fourth-largest agency company in revenue, so they match those of peers and competitors like WPP, which is first; the Omnicom Group, No. 2; and the Publicis Groupe, third.
“It’s a little bit easier of a meeting today than it was five years ago,” Frank Mergenthaler, executive vice president and chief financial officer of Interpublic, said with a smile.
“We’re a much different company than we were five years ago,” he added, when financial oversight was so lax that “Interpublic was out of control.”
Interpublic “will attain peer-level margins” of 13 percent, Mr. Mergenthaler said, compared with 8.4 percent last year.
“It’s not if, it’s when,” he added, then proceeded to proffer a date: by 2014.
When Mr. Mergenthaler spoke at the first Investor Day, he was the fourth chief financial officer at Interpublic in four years. His presence at the second one, in the same post, said more than any PowerPoint presentation could.
Still, there were many slide shows and speeches and slick video clips during the meeting, which ran almost six hours. (The first one ran eight, including a brief power failure.) The audience heard from senior managers of the major Interpublic units — DraftFCB, Lowe Partners Worldwide, the McCann Worldgroup and Mediabrands — and top officers of Interpublic.
“A lot of people came up to me and said, ‘You must be feeling pretty good about where this company has gone,’ ” said Michael I. Roth, chairman and chief executive of Interpublic. He also held those posts at the first Investor Day, where he led the efforts to sell the turnaround story.
“I was asked, ‘Is today’s presentation sort of a victory lap?’ ” Mr. Roth continued. “What I’d say is that it’s a recognition we’re a real company and that, collectively, we’ve delivered a lot.”
“The opportunity is there,” he added, to deliver more, pointing to the recent decisions by Interpublic to resume paying a dividend and buying back shares.
In an interview, he was asked about the timing of Investor Day 2.0. “Now that the economy is turning around,” he said, “this is the right time to show how we’re positioned for the future.”
In an odd way, Interpublic may have benefited from the timing of its problems, which began to emerge in mid-2002. They included accounting irregularities, restatements of financial results and an investigation by the Securities and Exchange Commission that ended with the payment of a civil penalty of $12 million.
The ensuing measures to turn Interpublic around led to its operating conservatively in the boom years before the global financial crisis; for instance, it cut back on expensive acquisitions. That may have helped Interpublic in its efforts to get back on track.
Although “it was obviously a difficult period for IPG,” Mr. Roth said, using the stock-ticker symbol for Interpublic, “the difficulties positioned us well.”
An analyst who attended both meetings described as “impressive” what Interpublic achieved from 2006 to 2011.
“Clearly, they’ve come a long way,” said Alexia Quadrani, who was at Bear Stearns then and is at J. P. Morgan Securities now.
“The targets seem achievable,” she added, referring to remarks by Mr. Mergenthaler, “so long as we have a healthy economy.”
In trading on Tuesday on the New York Stock Exchange, Interpublic shares closed at $12.10, down a penny. On Investor Day 2006, they closed at $10.05; in the ensuing years, the price ranged from $2.61 to $13.81.
The Interpublic executives sought to keep the meeting looking forward more than back.
For instance, Matt Seiler, chief executive of Mediabrands, which oversees media agencies like Initiative and Universal McCann, announced a reorganization that replaces the traditional model of geographic regions with clusters based on the economic status and potential of countries. One cluster will include Brazil, Britain, China, France, Germany, India and Russia, while another will include Africa, the Baltics, the Middle East and Turkey.
And Darren Moran, the new executive vice president and chief creative officer at the New York office of DraftFCB, offered a preview of a commercial for the Oreo cookie line sold by Kraft Foods. The spot, for Oreo Fudge Cremes, shows a family expressing surprise at the taste by exclaiming eyebrow-raising catchphrases like “Shut the front door!” and “Franklin Delano!”
Although Mr. Roth and Mr. Mergenthaler returned from the first Investor Day, several others who made presentations in 2006 did not because they had left Interpublic. Among them were the former leaders of Lowe and the Mediabrands predecessor, the Interpublic Media Group.
Also different were the operations that concerned the audience members. In 2006, they asked about the subpar performances of Lowe and the media agencies. Five years later, those holdings having been deemed recovered, the questions were about results at the McCann Worldgroup, the largest Interpublic unit, which has lost some large accounts and undergone executive reshufflings.
“The Worldgroup wasn’t broken,” Mr. Roth said. “It just had to be transformed.” Among the shifts were the hiring of managers like Nick Brien, chief executive, and Mark Landsberg, chief executive of MRM Worldwide.
Ms. Quadrani said she believed “the Worldgroup problems are not as dire as those at the media group and Lowe five years ago.”
“It’s not like it’s broken,” she added. “It just needs to improve.”
Article source: http://feeds.nytimes.com/click.phdo?i=5c714d4a9e0fa7d37d8eb588909e13c7
Speak Your Mind
You must be logged in to post a comment.