Apocalypse Now: WPP Earnings Statement Recycles "Armageddon" Verbiage Five Quarters in a Row
No one expects earnings releases to read like literary classics, but WPP (WPPGY) CEO Martin Sorrell's quarterly disclosures are starting to feel like they're being written on autopilot. For a fifth straight quarter, and for six recent quarters overall, the ad agency holding company's statement included verbiage about the collapse of Lehman Brothers (which happened in September 2008), "Armageddon," "apocalypse," "the abyss" and things becoming "less worse."
His Q1 2010 disclosure, unveiled last week, contained all of them in the same paragraph -- a five-fer, if you will.
I previously suggested Sorrell was haunted by the Lehman collapse. But now I'm convinced that his staff are simply on autopilot: They open up the statement from last quarter, hit "Save As ..." and change the date. Since the onset of the recession, WPP's Q4 2008 statement was the only one to omit any reference to Lehman or The End of Days. Here they are in order:
- Q3 2008: Whatever the pattern, it is not likely that our budget will reflect the Armageddon currently predicted by the fall in stock prices.
- Q1 2009: 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.
- Q2 2009: The impact continued to intensify in the second quarter, though results for July did indicate a "less-worse" picture ... although there is little doubt that CEOs and CMOs feel better about the general economic environment, Armageddon or Apocalypse now having been averted, there is little evidence of better heads and stouter hearts translating into stronger order-books or investments â€" at least, yet. Things look better, as they naturally should, partly because of easier comparatives.
- Q3 2009: Confidence, however, remains fragile amongst consumers, because of the shadow of high unemployment levels and amongst corporates, because Armageddon and Apocalypse now were barely avoided in September 2008. 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.
- Q4 2009: Like-for-like revenues, excluding the impact of acquisitions and on a constant currency basis, were down 8.1%, reflecting "less worse" trends in the second half and final quarter of the year. ... 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.
- Q1 2010: Although the last quarter of 2009 was certainly "less-worse", the start to 2010 seems to indicate a change in client attitudes. Calendar 2009 budgets, which are the vast majority, were prepared during or just following the Lehman crisis, staring into the abyss. Calendar 2010 budgets, on the other hand, were prepared having avoided the apocalypse or Armageddon ...
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