Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: andrew krull who wrote (16400)	3/4/2002 2:54:14 PM
From: Ben Wa	Respond to of 18998

The Interpublic Group of Companies, Inc., is the largest organization of advertising agencies and marketing services companies in the world," the company's Web site boasts. Indeed, IPG's marketing prowess is perhaps nowhere more evident than in the presentation of its feeble financial results. - Last Thursday evening, when the company released its fourth quarter earnings, which included neither a balance sheet nor a cash flow statement. In the event, it was impossible to determine the company's operating cash flow. Furthermore, when an analyst asked about operating cash flow on the conference call, the company ducked the question. No other analyst on the call even broached the subject. - Despite the critical omission of a balance sheet and a cash flow statement, no less than four brokerage house analysts rushed out research reports the following morning, rating the stock some version of "buy." - IPG's sparse disclosure suited their purposes just fine. Thanks to all these analytical "high fives", IPG shares soared 14% on Friday. - Only Lehman Brothers dared to observe, "We did not see or hear anything in this [quarterly] report to get us more excited at this point," while maintaining a luke- warm "Market Perform" rating on the stock. - But elsewhere on the Street, analysts were effusive. "Brightening Outlook and Strong Free Cash Flow Trump Weak Revenue," gushed JP Morgan analyst Fred Searby. - This free cash flow comment so puzzled Grant's Investor analyst, Robert Tracy, that he rang up Searby to find out how the man calculated free cash flow with neither a balance sheet nor a cash flow statement. - Searby proceeded to berate and belittle Tracy. The Morgan analyst was clearly irked by the implication that he ought not to make definitive cash-flow comments in the headline of a "buy" recommendation without having seen the actual supporting documentation. - Why wouldn't Searby want to engage in a truth-seeking discussion, you may wonder? The answer may be contained in the disclosure at the end of his report, which states that "J. P. Morgan Securities Inc. and/or its affiliates acted as lead or co-manager in an offering of securities for Interpublic Group and WorldCom Group [an IPG subsidiary] within the last three years."