WPP Revenues to Fall 8.8% in Q1, Predicts Banker

24 April 2003

With the wondrous prescience conferred by the gods on investment banks [or, more likely, advance data leaked by an insider] Morgan Stanley is predicting an 8.8% fall in WPP Group revenues for the first quarter in 2003. Morgan’s statement was released some forty-eight hours before WPP is due to formally unveil its Q1 results (tomorrow, Friday).

WPP, the world’s largest agency holding company by 2001 global revenues, was relegated to third place by Omnicom and Interpublic when the numbers for 2002 were revealed by Advertising Age earlier this week [WAMN: 22-Apr-03].

But neither this setback nor last week’s downgrading of its debt rating by Moody’s Investment Services could stem a surge in WPP’s share price over the past week. Valued at £4.00 ($6.37; €5.78) on April 17, the stock stood at £4.24 by today’s first trading on the London stock exchange – a rise of 6%.

The shares also recovered from fears that WPP’s largest client, Ford Motor Company, is poised to slash up to 20% from its marketing budgets [WAMN: 10-April-03].

According to Morgan Stanley: “We believe this [Q1] will have been a weak quarter for WPP, as with all the other agency holding groups, and hence do not expect ceo Sir Martin Sorrell to change his bearing stance on a protracted recovery in global advertising spend.”

Sorrell is on record as saying he expects no sustained recovery in the global advertising economy until 2004 when a triad of major sporting events – the Olympics, Euro 2004, and the US presidential election – are likely to trigger an adspend spree.

Data sourced from: BrandRepublic (UK); additional content by WARC staff