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WPP Report, June 2000



Name: WPP Group PLC
Symbol: WPPGY (American Depositary Receipts)
Shares Held: 12
Date Purchased: 27-Mar-2000
HPD Paid: $84.6667
Currently Trading: $73
Percentage Loss: 13.78%
Annualized Return: -46.31%

Broker Recommendations:
   Strong Buy     2
   Moderate Buy   5
   Hold           1
   Moderate Sell  1
   Strong Sell    0

   Consensus      2.06 (1=Strong Buy, 5=Strong Sell)
 
WPP is up 25% from last month, as Wall Street got over the sticker shock from the Young & Rubicam merger.  Barron's ran a favorable article, quoting analysts who expected the stock to nearly double.  (That would put us well into positive territory.)
 
On June 14, WPP announced investments in five internet-related companies:
  1. Metapack, a British company that provides shipping, packing, and logistics to internet retailers.
  2. Imagine, an Israeli company which markets its Visual Meeting software to call centers for live customer interaction over the web.
  3. Red Sheriff (great name), a European net ratings/metrics company.
  4. BigWords, which makes the commercials with those annoying college students.
  5. Spydre Labs, an "e-business accellerator," kind of an incubator that invests in companies targeting the Latin American and U.S. Hispanic market, including TodoBebe.com, "the leading baby and parenting site for Latin America."  WPP fill have first option on providing marketing services to Spydre's companies.
On June 19, WPP Group company CommonHealth announced an alliance with CIA Medianetwork to market pharmaceuticals direct-to-consumers.
 
More mergers
 
Publicis, the French ad agency that lost out to WPP in the bidding for Young & Rubicam, bought Britain's Saatchi & Saatchi.  The merger will create the world's fifth-largest advertising company.  WPP remains at number 1. 
 
Both mergers were stock-swap transactions, so the valuation can change as the acquiring company's stock fluctuates.  Based on prices on the day each merger was announced, here's the breakdown, showing what each acquisition cost per dollar of 1999 revenues:
 
Y&R cost $5.5 billion for $1,717 million in revenues = $3.20 per $1 rev.
S&S cost $1.96 billion for $631 million in revenues = $3.10 per $1 rev.