WPP GROUP PLC – downgraded to negative
March 25, 2009
It appears that WPP group plc is now downgraded to negative. Standard & Poor’s Ratings Services took the first step toward a possible downgrade of U.K.-based advertising agency WPP PLC (WPPGY), saying earnings weakness will hinder efforts to pare debt. This is French for more firings, more downsizing and more bad times ahead for employees.
It also cut WPP’s short-term ratings one notch to A-3.
Lowering its rating outlook on WPP group plc to negative “reflects our view that the significant deterioration of economic and advertising conditions worldwide may lead to significantly slower-than-expected deleveraging at WPP, and even to increased leverage in the short term,” said S&P credit analyst Melvyn Cooke.
The ad giant’s balance sheet is burdened by its mainly debt-financed acquisitions in pretty much the wrong industries. It allocated huge sums to purchase firms that have limited experience online or the wrong experience online.
It’s what happens when your “future ad agency” misses the future.
The impending downgrade will limit their ability to raise funds on decent terms. Story is developing…
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