It hasn’t been a great year so far for MDC Partners and recent developments signal that things aren’t going to improve any time soon. The company just laid off a handful of corporate staffers including at least one member of the company’s C-Suite: CMO Bob Kantor.
The layoffs come on the eve of the company’s Q2 earnings announcement, scheduled for this Thursday. So far, there are no signals that Q2 results are going to be very positive.
To say that the firm’s first-quarter results were disappointing is an understatement. The weak results prompted the company to downgrade its full-year organic revenue growth projection from 4% to between 1% and 3%.
Those results also prompted one disappointed investor on the Q1 earnings call, Lee Cooperman of Omega Advisors, to tell CEO Scott Kauffman that he has “not been the best custodian of the shareholders’ money.”
Ouch!! That had to sting.
Kauffman responded that all options were on the table regarding the company’s efforts to maximize shareholder value.
Last year, the company received a capital infusion of $95 million from Goldman Sachs, which now has a seat on the company’s board.
You know that has to mean a company sale is under constant consideration.
At the time of the Goldman infusion, the stock got a bit of a boost. But it’s still hovering in the $5-plus range. It hasn’t really recovered from the 2015 scandal involving former CEO Miles Nadal, who inappropriately expensed millions.
Before the scandal broke, the company’s stock was trading in the $28-plus range. The SEC investigated and barred Nadal from managing publicly traded companies among other sanctions. Nadal also returned $20 million or thereabouts to the company.
This Thursday’s Q2 earnings call should be interesting. I wonder if Martin Sorrell will be listening in.