WPP

WPP held its earnings call this morning and the best summation Sir Martin Sorrell & Co. could offer was that Q3 was “less worse” than Q2. According to the release, revenue during the 3-month period ending September 30 rose 16.7% year-on-year to approximately $907 million. But this figure doesn’t reflect acquisitions like TNS and currency fluctuations, so if we’re talking reality here, like-for-like revenue growth was actually down 8.7%. Still, WPP can at least take solace in the fact that this is well below Q2′s 10.5% drop.

“There is little doubt that consumer and corporate confidence has recovered somewhat from the panic [of Q4 '08 and Q1 '09],” WPP said in its earnings call. But the company is quick to note that it will be “even Stevens” for its 2010 budgets, saying that if there is a recovery, expect a slow one.

While the least affected regions of revenue growth/decline continue to be Asia Pacific, Latin America, Africa, the Middle East and Central and Eastern Europe, Western Continental Europe took the biggest hit followed by the U.S. and U.K.

On the job front, while Sorrell did warn of cuts this year to the tune of 7,200, Paid Content says that he unfortunately exceeded this number. According to the report, headcount is now 11,232 lower than it was at December 31, 2008, denoting a 10% drop in staff overall.

More: “Never Mind the Earnings, WPP Sees Stock Rise”

AdAge may have ruffled some feathers when just prior to the Labor Day holiday, they published a story stating that WPP’s Grey was slated to pitch the new Chrysler work. Yesterday, the publication reported that WPP got a bit of a slap on the wrist when Ford learned of the Grey’s plans to pitch the Chrysler business. And that’s no surprise, really, since WPP’s Team Detroit services Ford.

“That Ford is putting its foot down and barring WPP from pitching a rival automaker’s account isn’t a surprise, especially when you consider its history with the holding company and its comparative position to Chrysler.

“Ford spent $1.9 billion in 2008 on U.S. advertising and ranks as the 11th largest national advertiser, according to Advertising Age’s DataCenter. It also was alone among Detroit automakers in maneauvering through the industry’s stunning downturn in 2008 and 2009 without taking a U.S. taxpayer bailout.”

WPP head Martin Sorrell was not immediately available for comment. However, we have heard that calls were made to Ford immediately following the publication of AdAge’s initial report (now unavailable online). Why WPP felt pitching this client was OK has yet to be revealed.

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More: “Oh Look, Ford Has an Assurance Program Now”

Sir Martin Sorrell must be smiling in light of a MarketWatch report that states in London, WPP’s shares have advanced 3.9% ahead of its earnings call, in turn spurring Deutsche Bank to upgrade the umbrella company’s status from hold to buy.

A broker tells the trade, “Even if revenues remain under pressure, a radically leaner cost base means management can now paint a more positive view on margin prospects for next year.” Guess the leaner and meaner WPP explains Sorrell’s job cut forecast this year.

Update: What goes up must come down we suppose because even though WPP has seen its stock rise, Sorrell’s company has also watched profits plummet by 47% in the first half of ’09 according to the Guardian. July results though have been “less worse” according to WPP so don’t put away those party hats and streamers just yet.

More: “If You Work at WPP, Say Bye Bye to the Next 5 Years”

WPP shareholders voted overwhelmingly in favor of a program that, if successful, will make them and Sir Martin Sorrell (aka June 21), a lot of money. For you, WPP kids, that means more business based advertising rife with acquisitions and less advertising-by-creatives.

The deal will, according to Adweek, put some $96 million in Sorrell’s pocket, if he outperforms 9 other companies in the next 5 years. Oh S.Marty, what about the children?

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Martin Sorrell‘s WPP Plc has seen four straight months of “lower sales”, which will probably result in further job cuts this year.

“For the remainder of 2009 the short-term focus will continue to be on balancing staff costs and headcount, against the fall in revenues,” the company said. The number of employees dropped by 4,300, or 3.7 percent, in the first four months. Over half the people who left did so on a voluntary basis, London-based WPP said.

&#151 Bloomberg

According to the report, Sorrell says the first signs of the end of the downturn for his company will be seen in Asia.

Interestingly the company reported revenue with acquisitions are up 34%, but that isn’t enough to prevent the layoffs we’ve all seen coming for awhile.

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Got this one from a spy of mine a few weeks ago.

Q: What is Sir Martin Sorrell‘s nickname?

A: June 21

Click continued if you don’t get it. I didn’t, at first.

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Our Google alert has alerted us to the news that WPP’s Enfatico will be merged with Y&R. From the WSJ, who broke the story:

“The move is a retreat from one of the most ambitious projects on Madison Avenue – an effort to eliminate turf wars by housing many different marketing disciplines within a single firm. The structure was one of WPP’s key selling points when it landed Dell’s advertising and marketing business in December 2007.”

A statement from the agency read that this was “a strategic decision” and that “Enfatico remains a standalone brand alongside Y&R’s other companies including Y&R Advertising, Wunderman, Burson-Marsteller, Landor and others.”

You knew this was coming. From the beginning, Enfatico was the subject of the ad industry’s jeers. One client. Too many bodies. A huge lease on a downtown building. Mediocre creative, high level staff changes on the client side and everyone has heard the rumors that Dell is shopping around. A bold idea has gone bad. CEO Sir Martin Sorrell was going to have to do something with the increasingly heavy weight of Enfatico. WPP isn’t healthy enough (and really who is?) to redistribute the shop’s employees, which number around 800 people worldwide. Where are they going to go? As Sorrell recently wrote in The Financial Times: “Some have said that, intellectually, recessions are exciting or fun. That is callous nonsense. Telling someone who has lost their job or business that their troubles are merely part of a cycle will provide little comfort.” Oh how true. Maybe Marty-Mar should write everyone at Enfatico a little note, hmmm?

Meanwhile, WPP as a whole is struggling. JWT recently closed its Chicago shop. In the UK, Publicis beat out a team from WPP for Visa’s 2012 Olympic business. Y&R Chicago just lost the Miller Genuine Draft account to the New York office of Publicis Groupe’s Saatchi & Saatchi. And WPP’s Mindshare is defending the $250M Wrigley account any day now.

Tough times for WPP. Still, the company is pushing deeper into the Pakistani market. Does Sorrell have President Asif Ali Zardari in his pocket? Zardari is known as “Mr. 10% Percent” considering his alleged skill in the fields of bribery and money laundering. WPP isn’t alone though. Plenty of death star agencies are hoping that growing businesses in “developing countries” will defray some of the shock and awe happening in the US, as well as Europe. In WPP’s case, the balance sheet is a little shaky. Sure, WPP posted $13.6 billion in revenue for 2008, but that includes two months of revenue from TNS and it’s against a whole lot of debt.

In early March, the Sorrell told investors that: “I’d just like to say in the 25, 30 years that I’ve been in the business, I have never seen anything quite like this.” His long list of worries is surely growing and growing and growing.

More: Enfatico Fails On The Adamo Campaign

Today, the market is up and up as investors respond to Treasury Secretary Tim Geithner’s plan to save the banking sector. Meanwhile, Citi analysts have downgraded WPP’s stock from buy to hold. On the London market, WPP was a “prominent faller” dropping 1.24 per cent.

What did Wilson Phillips say? Something about knowing that there is pain, but if you hold on for one more day, you can break free, break free from the chains? Hold on WPP. Just hold on, okay?

More: WPP Is Worried About A Few Things

WPP released their preliminary earning results today. Rather than just shovel the good news (billings up 16.6% and reported revenue up 20.9%) or the bad news (impending layoffs and a revised target margin), I thought it would be more interesting to highlight the “principal risks and uncertainties” the company foresees as we head deeper into 2009. Just take a look at the list below. It ranges from noting that the group’s revenue comes from a limited number of clients to possible judgements against WPP to the basic issues of being in an economic recession. Of course, companies often make such a list, but in this case, it’s a nice summation of what all the holding companies are currently up against. Shit. I should call JWT and tell them I’m now, very, very, very anxious, indeed.

a. The Group competes for clients in a highly competitive industry, which may reduce market share and decrease profits.

b. The Group receives a significant portion of its revenues from a limited number of large clients, and the loss of these clients could adversely impact the Group’s prospects, business, financial condition and results of operations.

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You’ve gotta love Sir Martin Sorrell‘s attempts at staying positive, don’t you? Last night he was honored along with Scripps Networks Interactive Chairman of the Board, President & CEO Ken Lowe during the Paley Center for Media’s annual Gala Dinner held at Cipriani 42nd in New York. As usual, Mr. Sorrell had some notions about the future to share.

PRNewser’s Joe Ciarallo was there to report, and quoted Sorrell as saying thinks will pick up, “maybe in the second half of this year.”

Yeah, maybe. But we’d guess he wasn’t talking about WPP agency Enfatico, which cut an estimated 80 people yesterday. We’re told there will be additional cuts in the future, despite the agency’s assurances that yesterday was the only day of planned lay offs.

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More: “Layoffs Have Begun at Enfatico”