Interpublic Initiated as Neutral - Analyst Blog

Recently, we initiated The Interpublic Group of Companies, Inc. (IPG), with a Neutral recommendation.
 
The third-largest advertising company in the world continues to look for strategic investments that will position it to capitalize on the emerging markets. In 2007, the company made investments in India and Brazil, further strengthening its presence in these developing markets. The company’s partner in Russia is the leading advertising agency in that country. In China, the company operates through all of its global networks and offers its full spectrum of marketing services.
 
However, Interpublic depends on a few significant customers for a large proportion of its revenues, which could substantially affect its business. The company’s top 10 clients accounted for almost 26% of total revenues in 2007 and 2008. Interpublic’s largest clients are General Motors (GM), Verizon Communications Inc. (VZ), Microsoft Corp. (MSFT), Unilever Plc (UL), and Johnson & Johnson (JNJ).
 
Interpublic Group represents several different brands or divisions of each of these clients in a number of geographic markets, as well as provides services across multiple advertising and marketing disciplines. The loss of any of these clients would substantially affect the business.
 
Interpublic Group is exposed to exchange rate fluctuations, as a significant portion of its revenue is generated through international operations. However, its strict cost discipline should see the company through the economic turmoil and help it to thrive when demand for marketing services picks up as part of a broader recovery.
 
During the third quarter of 2009, the organic decrease was 12.5% and salaries as well as related costs were down 11% year over year. Organic office and general costs were more than 15% lower than last year. This is required to help the company pull through in the challenging revenue environment, and position itself for future growth and profitability.
Read the full analyst report on "IPG"
Read the full analyst report on "VZ"
Read the full analyst report on "MSFT"
Read the full analyst report on "UL"
Read the full analyst report on "JNJ"
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