LONDON — WPP Group PLC, which built the world's largest advertising company through heavy borrowing, was on the critical list Tuesday, the latest victim of an economic downturn in Britain and the United States.
WPP stock has lost 70% of its value since the firm said Monday that profit would be lower than forecast. Analysts predicted drastic cost-cutting to stave off a cash crisis.
The company owns Ogilvy & Mather, J. Walter Thompson and other ad agencies.
WPP stock plunged $3.20 (1.64 pounds) Tuesday to $2.25 (1.15 pounds). In two days of frenzied selling, it has fallen $5.50 (2.77 pounds). The company's American shares, traded over the counter, have followed suit.
Dealers hit the panic button after the profit announcement and continued to sell Tuesday as they reassessed the vulnerability of the company in a weak ad market.
WPP had cited the economic downturn as the reason profit for the year would be lower than analysts' estimates of $217 million.
WPP's acquisition last year of the prestigious Ogilvy Group propelled it to the top of the advertising world but left it straddled with a mountain of debt--$610 million (315 million pounds) worth.