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Omnicom Group (OMC)
Q4 2010 Earnings Call
February 15, 2011 8:30 am ET
Randall Weisenburger - Chief Financial Officer and Executive Vice President
John Wren - Chief Executive Officer, President and Director
Daniel Salmon - BMO Capital Markets U.S.
Craig Huber -
William Bird - Lazard Capital Markets LLC
Meggan Friedman - William Blair & Company L.L.C.
Alexia Quadrani - JP Morgan Chase & Co
Tim Nollen - Macquarie Research
James Dix - Wedbush Securities Inc.
Previous Statements by OMC
» Omnicom Group Inc. Q1 2010 Earnings Call Transcript
» Omnicom Group Inc. Q4 2009 Earnings Call Transcript
» Omnicom Q3 2009 Earnings Call Transcript
Thank you all for taking the time to listen to our earnings call. We hope everyone's had a chance to review our earnings release. We’ve posted to our website both the press release and a presentation covering the information that we'll present this morning and a little more. This call is also being simulcast and will be archived on our website.
Before we start, I've been asked to remind everyone to read the forward-looking statements and the other information that's included on Page 1 of our investor presentation, and to point out that certain of the statements made today may constitute forward-looking statements and that these statements are our present expectations and actual events or results may differ materially.
I've also been asked to remind you that during the course of this earnings call, we will discuss some non-GAAP measures in talking about Omnicom's performance. You can find a reconciliation of those measures to the nearest comparable GAAP measures in the presentation materials posted to our website.
We're going to begin the call with some brief remarks from John Wren. Following John's remarks, we'll review our financial performance for the quarter, and then both John and I will be happy to take questions.
Good morning, and thank you for joining our call.
Before I talk about the quarter and some of our views about moving forward, I'd like to spend a few minutes to comment about 2010.
When I spoke to you a year ago at this time, we believed we were at the beginning of the end of the recession. Over the course of 2010, we've seen a steady increase in the number of clients around the world who are again investing in their own growth. At the same time, we also understood that the rapid pace of economic and technological change affecting our industry would require us to make continuous adjustment to our businesses, to improve our operations and our core structures, to push ourselves to innovate business models and product offerings, to continue to invest in our high-performing businesses and rapidly growing markets, to reorganize or close businesses that were not well positioned to recover from the recession or that no longer met our strategic plans; and more recently, to make several important acquisitions in key growth markets and disciplines.
Despite these challenges, we asked our agencies to get closer to their clients, deepen relationships, even in the absence of significant budgets, and to make the tough decisions quickly so that they could turn their attention to growth. We're happy to say that we believe our 2010 results demonstrate that we're making significant progress towards these goals. For this, I'd like to thank all of Omnicom's employees for their hard work and professionalism and our clients for their continued trust.
Now let me turn to our fourth quarter results. Overall, our fourth quarter results showed significant improvements over Q4 2009 and improved trends relative to previous quarters. In particular, I want to highlight a few of these things today.
First, organic growth in the fourth quarter was up 10%, this despite the loss of Chrysler in the first quarter of 2010, which lowered our organic growth by 1.5% for the quarter. The fourth quarter was the strongest of the year. Second, during the quarter, we've identified underperforming businesses and we started to dispose and/or reorganize some of these businesses. As Randy will discuss, we plan to take additional steps in the first half of 2011.
We believe these actions will allow us to make steady progress towards our objective of improving our margins to 2007 levels by 2012. These changes will also allow us to focus greater management attention and resources on businesses well positioned for growth.
During the quarter, we completed and announced a number of acquisitions designed to help us build our footprint geographically and to add important skill sets where appropriate. The largest of these transactions was our acquisition of the controlling stake in Clemenger, which closed earlier this month. Clemenger is the largest in premier communications group in Australia and New Zealand. This acquisition will give us additional flexibility to truly leverage the skills, reputation and people of Clemenger to grow our combined businesses throughout the Asia Pacific region.
Fourth, following the announcement of our partnership with Google in the third quarter, we have completed additional partnerships with Microsoft and Yahoo!, which will be announced this week. We expect to complete several other strategic partnerships in the coming weeks. These partnerships are consistent with our philosophy of building internal competencies in digital marketing and media while partnering with the most innovative technology companies.
We've also continued to invest in our people by expanding our digital education efforts to ensure continued training and development of every Omnicom employee. Our goal is to ensure that our employees are continuously improving their skills to keep pace with the technological changes affecting our business and to share the learnings of our agencies around the world.