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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 Interpublic Group of Companies, Inc. 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

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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.