Drama is building around WPP's Q2 2009 numbers, due on Wednesday: Will holding company chief Martin Sorrell cut his full-year revenue forecast a second time this year, indicating that he underestimated the severity of the recession? The Times:
Sir Martin Sorrell, WPP's chief executive, said in April that he expected sales to show a mid single-digit decline for the year, revising down his earlier prediction of a 2% drop. Analysts, though, think WPP may not hit even this revised target.BNET noted in June that Sorrell appeared to be laying the groundwork for a dismal set of Q2 numbers. The Telegraph:
Analysts forecast revenues of about Â£4.27bn, reflecting an organic decline of about 7.9pc.
... analysts agree that WPP probably paid over the odds for its more recent large deals such as the May 2007, pre-recession acquisition of digital business 24/7 Real Media for $649m, and the late 2008 purchase of TNS, which came before the severity of the recession was understood.WPP's shares, however, have bounced back from their recent dip. Deutsche Bank issued a "buy" recommendation, while other analysts argued that concerns over WPP's debt levels are overplayed.
Bottom line: The bad news appears to be fully priced in to the stock. This gives Sorrell the best of all worlds. If Wednesday's numbers are lousy, there won't be any surprises. If they're good, the stock will rise even more -- making Sorrell look like a genius.
- See previous coverage of WPP:
- Sorrell Between Rock, Hard Place as He Balances Debt, Stock and His Own Pay
- Did You Check Out WPP's Line of Bath and Kitchen Products?
- Wall Street Downgrades WPP on Debt Fears; Has Sorrell Reached His Credit Limit?
- Citi Cuts WPP to "Sell"; Sorrell Defends "Suicide Pact" on Pay; Attacks Obama on Taxes
- Sorrell's Comments on Procurement Reveal Opacity of Agency Billing Practices
- WPP: Sorrell Sees No New Client Dollars; Layoffs Possible in Europe; Zimbabwe Eyes an Opportunity
- Could WPP Chief Sorrell's Successor Be Lord Stephen Carter?
- WPP Stock Down 11% as CEO Sorrell Gets $95 Mil. Pay Package. Coincidence?
- At WPP, Sorrell's $95 Mil. Pay Package Gathers More Foes -- But Passes Anyway
- WPP's Sorrell Wants $95 Million Pay Package; Sparks Protest at "Unnecessarily Complex" Scheme
- WPP's Sorrell Dusts Off Latest Wacky Recovery Metaphor: "An Italic L, Flipping Up"
- WPP Q1: Debt Doubles; "It's All Lehman Brothers' Fault"