Sometimes, bad things have to get really bad before getting better. Shareholders of Interpublic
On Friday, the company announced that its first-quarter loss had nearly doubled in comparison to its loss for the same period the year before. Talk about a real downer. Interpublic racked up $16.9 million in net losses for the first quarter compared to an $8.6 million loss the previous year.
It seems Interpublic's restructuring is costing a bit more than expected. For the current quarter, restructuring costs clocked in at $70 million (ouch). What was first anticipated as $250 million in total restructuring costs has now ballooned up to $300 million. However, once the restructuring is complete, the company purports to save upwards of $200 million per year. With annual revenue of more than $5.8 billion in 2003, the potential savings isn't nearly as impressive as one might expect.
This isn't the first time Interpublic has had trouble with its image. Fellow Fool Rick Munarriz pointed out its past problems last August when the company had to restate earnings projections and lost several valuable clients.
It's been a tough road for Interpublic, suffering losses while its competitors take advantage of the marketing sector's rebound. Rivals like Omnicom
Interpublic is hoping its restructuring will boost its savings and allow it to ascend to the top of the marketing game. However, it will be a tough task considering that the company's annual sales have declined the past three years. All of the cost savings in the world will not matter unless Interpublic can attract and retain top-tier clients and increase sales and earnings once the restructuring is complete.
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Fool contributor Jason Matthews would like to restructure his messy closet, but he fears for his safety. He owns no shares of the companies discussed in this article.