The Interpublic Group of Companies, Inc. at Deutsche Bank Securities Inc. Media and Telecom Conference - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

UNIDENTIFIED COMPANY REPRESENTATIVE, THE INTERPUBLIC GROUP OF COMPANIES, INC.: Good morning. Welcome to Deutsche Bank's 16th annual meeting telco conference. I know no better way to start my track than -- we've got short time slots, so I'll keep the introduction very short. A great start to my track today with Michael Roth, CEO and Chairman of the Interpublic Group. Welcome, Michael.

MICHAEL ROTH, CHAIRMAN AND CEO, THE INTERPUBLIC GROUP OF COMPANIES, INC.: Take you a long time to figure out that introduction, Paul? Thank you. Good morning. I see a lot of familiar faces here, so I won't go over -- certainly, I won't read the cautionary statement that's in front of you. I think you've seen it before. Normally, I spend a lot of time about IPG. Let me just focus on -- obviously, for those of you who don't know IPG, we're one of the four holding companies, consumer, advertising, and services. Of note is that of the four holding companies, consolidated, we account for over 50% of the U.S. advertising, to give you a perspective of the market share. But in addition to consumer advertising, we do public relations, events, branding, media, all the different marketing communication businesses. And I'll talk to you a little bit about what's happening in our environment and how we are faring in this very competitive and difficult environment. Of note is the fact that we have a diversified revenue base and sector base. I think this is a key slide because certainly a number of you were asking questions.

We put up a pretty good first quarter. We're sticking to our stated objective for 2008 and everyone wants to know how is that possible, given all the issues in the economy. I think what you have to do is just look at the diversification in our revenue stream by geography as well as sector, to understand that obviously, some of the sectors are challenged, but we have a number of sectors that are performing quite well. And even in the sectors that are challenged, we are doing okay in. For example, the financial service sector, as you'll note, 7% of our revenue comes from the financial service sector. The largest company in that financial service sector for us is MasterCard. They are not directly impacted by the subprime as some of the other financial institutions. Also notice a pretty good weighting in tech and telecom, which are performing well. Of course the other question you might have is in retail, and our retail segment is performing well, driven a good portion by the success of Wal-Mart.

I think what accounts for the fact that we put up some good results in the first quarter and we're holding to our numbers for 2008, is the fact that we are diversified, both -- not only in the sectors and the regions, but also in the services that we offer in this very difficult environment. And that's what I'm going to talk to you about this morning, in terms of how we compete in this changing environment. IPG, some of you -- and I know some of you know us from the heydays of our industry, when IPG created the holding company and did all of its acquisitions and ran into some problems. We are a turnaround. We're in the midst of our turnaround. We're actually coming through our turnaround. I'll talk about that.

But for the period 2005 and 2006, we added a whole new senior management team. We strengthened our financial controls. We enhanced our balance sheet, which was a significant story for us. We established Best-in-Class corporate governance. And we stabilized frankly, our company. Our main objectives certainly, when new management came in was to stabilize the environment of our company so we can fix and address all the issues that were necessary to be competitive in the marketplace. Coming through 2007, you can see the good progress that we've made, particularly in terms of recruiting new management and leadership across all our different disciplines. And we're back in terms of new business positive, because we've added a significant amount of talent and resources where it had to be. I'll talk a bill about that this morning in terms of our digital offerings.

One of the big issues for us was Sarbanes-Oxley compliant. Many of you know, we were the poster child for Sarbanes-Oxley. As you know, we completed 2007 with full compliance. And we dramatically improved our financial performance during this period, and we did that by focusing on what was necessary in terms of being competitive in the marketplace and taking a hard look at our staff cost ratios and our margins, and our revenue as we come through this difficult environment. Some of you remember it last year when I talked about the changing media landscape and I indicated that this was my office. It still is my office and it's -- it reflects the fact that we have so many different media opportunities and ways of communicating with the consumer out there.

If you think about it, in 1980, there was -- you can reach 80% of the women in the marketplace by taking one network advertisement and putting it on three networks. And today, you have hundreds of different media channels that you have to address, whether it be outdoor, indoor, digital, YouTube, viral marketing, all the different media opportunities to reach the consumer. And that's frankly, the opportunity for us in terms of helping our client's landscape through this difficult environment. Everyone talks about the consumer being in control. Even in TV, which historically has …