IPG Misses Widely on Earnings, Restatement Grows

The advertising group said the amount of restatement grew by more than 50% over previous estimates.
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Interpublic Group

(IPG) - Get Report

, the world's second-largest advertising agency, said Wednesday that third-quarter profits fell short of Wall Street estimates and that the amount of its restatement increased by more than half.

Interpublic notified the

Securities and Exchange Commission

that it plans to avail itself of a five-day extension to the Nov. 14 deadline for filing its quarterly 10-Q report in an effort to finalize bookkeeping issues at the company's flagship McCann-Erickson, which have already resulted in $120 million of restatements. The restatements have involved the simultaneous booking of overlapping revenue by more than one segment of the far-flung advertising empire.

The issue concerns which restatements fall into what time periods. The final amount of the company's restatement will be $181.3 million, which reduces all previously reported pretax income from 2001 and earlier periods, making a mess of a once-strong balance sheet. The restatements are now nearly three times the amount the company first disclosed in August. The company said it has launched a search for a new chief operating officer and a new finance chief for McCann-Erickson, replacing Salvatore LaGreca, who is stepping down.

The New York-based company posted a third-quarter net profit of 2 cents a share on revenue of $1.5 billion, compared with 15 cents a share on revenue of $1.6 billion a year earlier. Analysts, on average, expected the company to earn 8 cents a share, with estimates ranging from 5 cents to 10 cents, on revenue of $1.52 billion, according to research firm Thomson Financial/First Call.

The shares, which have fallen more than 72% year to date, dropped 36 cents, or 2.8%, to $12.58 in regular trading Wednesday. The stock was down another 7.8% to $11.60 in after-hours trading on Instinet.