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WPP Earnings: CEO Sorrell Still Haunted by the Ghost of Lehman

By Jim Edwards

Updated on: March 5, 2010 / 2:53 PM EST / MoneyWatch

WPP (WPPGY)'s Q4 2009 earnings report was, again, an apparent reflection of CEO Martin Sorrell's continuing obsession with the idea that the collapse of Lehman Brothers was somehow the trigger for the entire Great Recession. Either that or he's just copy-and-pasting verbiage from his previous earnings releases into the current one.

The holding company that owns such ad agencies as Ogilvy & Mather, JWT and Young & Rubicam, described its 8.1 percent decline in like-for-like revenues this way:

We seem to have moved from staring into the abyss post the Lehman Brothers crisis, to a "less worse" phase in the second half of 2009 and a stabilisation phase towards the end of 2009 and the beginning of 2010.

It's the third time that Lehman has been namechecked by Sorrell. In Q3 2009, WPP said:

As the Company's revenue growth figures for the third quarter indicate, things are certainly "less worse" than the second quarter and July, August and September, have all shown improvement over April, May and June. And so they should, given the massive fiscal and monetary stimuli pumped into the world's economy, since Lehman collapsed and given the fact that, Armageddon having been avoided, we are cycling easier comparatives.

In Q1 2009 the company noted:

On a like-for-like basis, excluding the impact of acquisitions and currency fluctuations, revenues were down 5.8%. This reflected cuts in client spending in reaction to the global financial and economic crisis, essentially after both the sub-prime crisis and the collapse of Lehman Brothers in September, as de-stocking followed declines in consumer spending.

To be sure, the loss of Lehman presaged the collapse of the stock market and was the signal event at the beginning of the recession. But the idea that Lehman alone was somehow at the root of the recession -- and thus WPP's declining revenues -- just isn't true. It was more a symptom than a cause.

The statement also contained some of Sorrell's trademark asides, including:

2009 was a very difficult year and a tale or game of two halves.

Translation for Americans: That's a fluffed reference to the phrase, "It's a game of two halves," the meaningless cliche favored -- at least apocryphally -- by British soccer commentators.

And:

2010 should be a more stable year (famous last words!).

The report ends with the words "We thank and salute them all," meaning WPP's talent. Doubtless it's heartfelt but there's far fewer of them: WPP has 13,904 fewer employees now than a year ago, the company said, a decline of 12.3 percent.

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