• BNet, Thursday, April 30, 2009 10 AM

Interpublic's results for the first quarter of 2009 suggest that layoffs at its agencies may not be over yet. The reason: IPG continues to hemorrhage cash. The company reported that revenues declined 10.8% to $1.3 billion resulting in a loss of $74 million. The cashflow statement saw a loss of $466 million, due mainly to a loss of $557 million on its operating activities.

IPG blames the cash loss on the season. During the upfront, agencies have to buy a lot of media that they won't get reimbursed for until later in the year. But when pressed, CFO Frank Mergenthaler told investors that 60% of the decline was normal seasonal media buys and 40% was due to the recession.

The deterioration in IPG's results indicate that the network may have to cut more jobs in order to make up for revenue declines. For every $1 IPG spends on agency staff salaries, it earns back $1.33 in revenue. That's the lowest it's been since Q1 2008, and down from a recent high of $1.79 in Q4 2007.

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