Tom Winnifrith Bearcast: £2m coke & hookers money for the City boys, shareholders lose 80% - another day on the AIM Casino
I was at an event yesterday and found myself repeating that well known maxim that 'half of advertising spending works...I am just not sure which half'. I was reminded of this by the numbers from advertising behemoth WPP (WPP) this morning…
Hello, Share Flashers. One of the biggest business turnarounds in recent years is how advertising is changing. Though many of us are irritated by the seemingly unstoppable surge of adverts on the telly, the truth is that more adverts are being swapped over to big techies, like Google and Facebook. So it’s not entirely surprising that WPP (WPP), the giant marketing, P.R. and advertising agency, has reported lower revenue for the third quarter of 2018.
A couple of months ago I talked about advertising behemoth WPP (WPP) again noting that "in short, do not be tempted by WPP yet. The 'Sorrell lows' of c. 1100p are one place to have a think about it all but I would wait for the realities of the strategic update first". Too right...after today's update smacked the shares down over 15% at the time of writing - and even earlier today it fell the most on an individual day since 1999. Put that on your advertising billboards!
It is nearly six months since I last mused about the advertising behemoth WPP (WPP) HERE and it has not got any easier, even if its legendary founder Martin Sorrell did the decent thing and exited stage left...eventually. More on the great advertising man in a minute, but we all know that the key with this space (as with most sectors) is to underpromise and overdeliver. That in a nutshell is the challenge for the company's new CEO Mark Read, a company insider tasked with taking over the advertising company that Martin built…
And so a drama played out by teams of lawyers and teams of spinners leaking material to the Sunday Papers is over. Sir Martin Sorrell has quit with immediate effect as CEO of media giant WPP (WPP) but we are none the wiser as to what exactly happened. The formal statement today - leaked so it could be spun to the Sundays, natch, begs real questions.
There are two jokes that I like about the advertising industry. The first is that it is one industry where the assets leave the office every evening and the second is that only half of all advertising works...it is just unclear which half that is. More recently though there has been a third joke...and that's the WPP (WPP) share price performance.
Back in August I wondered if advertising behemoth WPP's (WPP) name stood for 'What Profit Progression'. Well I got that bit correct judging by yesterday's results which were truly shabby with like-for-like full year revenue declines, a pulling back of medium-term growth hopes and rather desultory profit progression. No wonder the shares were down 8%, apparently their worst day this century. That hardly reflects the zip of the 'Mad Men' view of the advertising industry, more the drudgery of a new world where the big corporations are probing and prodding more their advertising spend.
Too many years ago to remember as a fledgling analyst and junior portfolio manager, I was told by an old hand that 'WPP is the company with the greatest correlation to the FTSE-100'. I have no idea - nor the boring Excel skills - to say whether this is true but the notion that the world's largest advertising company should broadly share the same ups and downs as the very international main UK market index makes quite a bit of sense.
Hello Share Scrunchers. Am I the only one who doesn’t see how advertising can possibly justify the huge sums spent on it? If someone interrupts one of my TV programmes by trying to get me to buy a certain breakfast cereal, am I likely to rush out and buy it at the earliest opportunity? One can only assume that there is something subconscious at work here, which makes you buy the stuff on an involuntary basis.
WPP interim results are a classic example of what the strong pound has been doing to British overseas earners. Thank God the minority of two on the Bank of England rate setting Monetary Committee did not persuade the rest to raise interest rates when the Committee met recently. Life is tough enough for companies such as WPP (WPP); most of its top line revenue comes from overseas. In the six months to June 30 this was reported up 2.7%. However, if it were not for the painfully strong Sterling exchange rate, revenue, we are told would, have risen a staggering 11.3%.
WPP (WPP) shares at 1200p - having fallen from a peak share price of 1391p - now provide a useful dividend prospect as they touch a trend support line. Here is why.
In my constant beachcombing for stocks that are worth buying I have turned up and turned over the equity of WPP (WPP)
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