Interpublic did not offer any guidance on when its results might improve, but Chairman-CEO Michael Roth said, "Client sentiment has stabilized, but remains cautious, which makes it difficult to predict what growth will look like in 2010. As a result, we are aligning our cost base against conservative top line assumptions and are positioned to deliver significantly improved profitability next year. This will allow us to fully capitalize on an advertising recovery and to see Interpublic achieve long-term success."
Interpublic's results follow those of other major agency holding companies, which also reported their worst results so far this year for the third quarter, though Publicis Chairman-CEO Maurice Levy earlier this week said it appeared that the ad economy had bottomed out this summer, and that the rate of erosion is subsiding for the industry.
In anticipation of Interpublic's relatively weak results, the equities research team at Deutsch Bank nonetheless issued a report Monday reaffirming its "buy" recommendation for Interpublic stock, citing, "exceptional revenue recovery/margin upside opportunity for patient investors.
"While near-term data points are not good and Interpublic is no quick fix, we think business momentum is improving along with the economic outlook, which positions that company to bridge the margin gap with the peers as the ad market recovers," the analysts wrote.