Zacks_Analysts' Blog : Interpublic Group's Partnership - Analyst Blog

Octagon, an Athletes and Personalities Division of Interpublic Group of Companies (IPG) is partnering with Impact Mobile Inc., a leading provider of mobile messaging and technology, in order to promote its athletes and sport activities through mobile networking. This would definitely bring the Octagon group into the limelight with mobile users.

Interpublic Group’s prime strategy is to grow either through product or geographical diversification. Interpublic Group continues to look for strategic investments to capitalize on the emerging markets. In 2007, the company made investments in India and Brazil, further strengthening its presence in these high-growths, developing markets with the near-term joint venture in India and a new retail activation unit in Brazil in the third quarter.

In 2008, Interpublic Group further built on this strategy and completed an important transaction that increased its stake in the Middle East Communication Networks (MCN). Headquartered in Dubai, MCN is the region’s premier marketing services management company with 60 offices across 14 countries.

The company’s partner in Russia is the acknowledged advertising leader in that country. In China, Interpublic Group operates with all of its global networks and across the full spectrum of marketing services and also opened a retail activation unit in China.

Interpublic Group has a strong liquidity position with no net debt at the end of the third quarter of fiscal 2010, which proves that the company has the capability to pay off debt out of present cash. Moreover, since the beginning of 2010, the overall market and economic conditions have improved. Client-spends particularly in the auto, retail and financial services sectors have improved, which is going to have a positive affect on the company’s operating results in future.

However, huge dependence on a few significant customers and a highly competitive market could substantially affect its business. The company’s direct competitors are Omnicom Group Inc. (OMC) and WPP plc (WPPGY). Thus, we maintain our Neutral recommendation on the stock.  The stock also currently retains its Zacks #3 Rank (short term “Hold” rating).