OPINION: Stuart Elliott in America

Enron, Tyco International, Adelphia Communications, Lucent Technologies, ImClone, Global Crossing, Omnicom.

That the stalwart blue-chip Omnicom Group, parent of agencies such as BBDO, DDB and TBWA, would appear on a list of corporations whose shares have cratered in the skittish stock market would have seemed absurd and outlandish only a few days ago. But since 12 June, when an article questioning Omnicom's accounting practices appeared on the front page of the US edition of The Wall Street Journal, the giant agency company finds itself in that dubious company.

In the two days of trading after the article was published, Omnicom stock - formerly the best-performing and steadiest of its peer group that includes Interpublic and WPP - plunged precipitously, costing the Madison Avenue giant about a third of its market capitalisation. It mattered not that most Wall Street analysts said they found little new, much less damaging, in the article.

"It's shoot first and ask questions later, said an analyst, who was taken aback that the shares had fallen so far, so fast. Worse yet, the analyst fretted: "The answers might not matter."

That seemed to be the case immediately after the appearance of the article, which cast doubts on matters ranging from the abrupt resignation of the chairman of the audit committee of the Omnicom board of directors to the methods the company uses to account for payments related to acquisitions.

Omnicom did everything that a crisis-management expert from one of its myriad corporate communications agencies would have recommended. There was a hastily arranged conference call with analysts, during which John Wren, the chief executive, derided the Journal article but nevertheless pledged to be more forthcoming in disclosing financial data. There was a statement of support from the Omnicom directors, along with a statement from another director who resigned in January, casting doubt on the article's rationale for why he quit the board. Omnicom even fired Arthur Andersen as its accountants, replacing the beleaguered firm with KPMG.

All those moves were about as effective as the TBWA/Chiat/Day work for Levi's jeans. The stock kept falling. One analyst reduced his rating for Omnicom stock from "outperform to "neutral", while another cut her 12-month target price for the shares from $100 to $82. A law firm sued Omnicom for fraud in a class-action complaint, charging the company with using improper accounting methodology. And Standard & Poor's reduced its outlook for Omnicom from "stable to "negative", reflecting what it called "some uncertainty regarding how current controversies may affect business activities".

The premise for that concern, expressed as pointedly as any slogan written by an Omnicom agency: "New-account wins, which have been occurring at a good pace, are linked to confidence in management and business stability."

In a business in which success depends on the kindness of strangers, as in clients who initially are strangers, the taint of controversy threatens to cast a pall over Omnicom after a winning streak that was the envy of the industry. What Interpublic, WPP, Publicis, Bcom3, Havas, Grey, et al had failed to accomplish, two reporters achieved with little more than what Waldo Lydecker, the acidic critic in Laura, described as "a goose quill dipped in venom".

Can Omnicom overcome? Yes, if clients and top talent stay the course. Otherwise, Omnicom might be Omnigone.

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