Interpublic Group of Companies, Inc. (IPG) has reported a net loss of $71.5 million for the first quarter of fiscal 2010, compared to a net loss of $73.9 million in the year-ago quarter. Net loss per share was 15 cents versus 16 cents in the first quarter of fiscal 2009. However, it was worse than the Zacks Consensus Estimate of a loss of 13 cents.
However, total revenue grew 1.2% to $1,341.3 million, up from $1,325.3 million in the same period of fiscal 2009 based on the improvement in economic conditions. Revenue generated from United States, which contributes 60% of the total revenue, bloated 2.8% to $803.1 million while International revenue dropped 1% to $538.2 million.
Operating expense remained almost flat at $1,400.7 million from $1,407.2 million in the same quarter of the previous year. However, as a percentage of revenue it declined 180 basis points.
At the end of the first quarter, cash & cash equivalents of $1.94 billion was down from $2.51 billion at the end of the previous quarter, but up from $1.66 billion at the end of the first quarter of 2009. Total debt remained almost flat at $1.94 billion, compared to $1.95 billion at the end of the previous quarter, but lower than $2.11 billion at the end of the first quarter last year. Thus, at the end of first quarter, net debt was nil from net cash position of $560 million at the end of previous quarter while at the end of first quarter of 2009, the company reported a net debt of $450 million.
Interpublic Group is exposed to exchange rate fluctuations, as a significant portion of its revenue is generated from international operations. However, its cost cutting initiatives should see the company through the economic turmoil and help it thrive when demand for marketing services picks up as part of a broader recovery. Thus, we maintain our Neutral recommendation on the stock.

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