UPDATE 2-Interpublic profit tops view; warns of risks ahead

NEW YORK, Oct 28 (Reuters) - Advertising company Interpublic Group posted higher-than-expected quarterly profit on Tuesday but warned that the financial crisis has jeopardized marketing budgets.

Third-quarter net profit applicable to common shareholders was $38.7 million, or 8 cents a share, compared with a loss of $28.8 million, or 6 cents a share, a year earlier.

Interpublic, the parent company of advertising agencies like DraftFCB and McCann-Erickson, said revenue rose 11.5 percent to $1.74 billion. The results surpassed analysts' average forecast of 6 cents a share on revenue of $1.65 billion, according to Reuters Estimates.

But Chief Executive Michael Roth cautioned that the financial crisis has begun to weigh on marketers' spending plans for the fourth quarter and next year, echoing recent comments from other top advertising executives.

'While we believe that with our strong performance year to date we remain positioned to achieve our financial objectives for 2008, the impact of an increasingly unsettled and volatile business environment on our sector is not yet clear and creates a risk to meeting our stated goals,' Roth said in a statement.

Also on Tuesday, French advertising group Publicis forecast a 'marked slowdown' in the ad industry next year. Last week, Omnicom Group Inc, the largest advertising company, issued similarly stark comments .

The broad economic troubles come just as Interpublic is recovering from its own problems, ranging from major client losses to questions about its accounting.

But Interpublic appears to have regained its footing in recent quarters, posting stronger-than-expected profit, bringing in new accounts and reporting solid growth rates.

In the most recent quarter, Interpublic's organic revenue, a closely watched figure that excludes the impact of recent acquisitions and foreign currency, rose 7.6 percent. That outpaced Omnicom, which posted organic revenue growth of 4.1 percent for the quarter.

Interpublic shares were indicated higher in premarket trade. The shares have fallen about 50 percent in the last month on concerns about the slowdown in advertising.

(Reporting by Paul Thomasch; Editing by Lisa Von Ahn and John Wallace)

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