Back to top

Analyst Blog

Interpublic Group of Companies Inc. (IPG - Analyst Report) announced that it has sold its remaining stake in Facebook Inc. (FB - Analyst Report) for $95 million. Earlier, in August 2011, the company had sold approximately half of its stake in Facebook for $133.5 million.

Noted under the Other Income category of the company’s income statement, the company recorded pre-tax gain of $94 million in the current sell off. In 2011, roughly $132.2 million was realized as pre-tax gains.

Although the value of the investment increased notably since the time it was made in 2006, management, however, does not consider it a part of the strategic investments of the company any more. The company hasn’t yet mentioned the alternatives that can be employed to utilize the gain either. However, the gain recorded in the third quarter of 2011 was used for capital loss carry forwards, which had a 100% valuation allowance recognized on them.

The company also received an approval from the Board of Directors to increase its previously authorized share repurchase program worth $300 million by $100 million. Since its authorization in Feb 2012 till Spetember 30, 2012, the company has repurchased shares worth $151 million. Also, the remaining shares can be repurchased at any time since they have no expiration date. Management considers this program a way to enhance shareholders’ value.

Interpublic Group of Companies is the third largest advertising company in the world, offering a range of advertising and marketing communication services. The company competes with other industry players, such as Omnicom Group Inc. (OMC - Analyst Report), Publicis Groupe SA (PUBGY) and WPP Plc (WPPGY - Analyst Report). The company holds a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

Please login to Zacks.com or register to post a comment.