Sir Martin Sorrell’s big bet on tech companies driving growth at his S4 Capital (Monks is its main agency) has taken another turn for the worse with S4 booking an impairment charge of £280m in its last financial year to reflect tough trading in the second half and a pretty grim medium term outlook. This led to a loss of £306.9m in the year to December 2024 compared to a loss of £14.3m in 2023.
Sorrell blamed the loss (including the hefty impairment charge) on tech companies investing in AI instead of marketing. Total revenue fell 16.1 per cent to £848m.
S4 shares actually rose 4% as S4 reduced its net debt from £180m to £140m and declared its first dividend, 1p a share. Presumably investors are hoping that the big impairment covers any horrors to come. S4, if that’s out of the way, may re-emerge as a takeover target. Mark Penn’s Stagwell made a tentative approach last year. Despite the losses £848m is a lot of revenue for someone.
The downside is that previously all-conquering Big Tech now no longer has money to burn, with AI costing a fortune and Donald Trump’s tariffs likely to lead to increased costs for many, particularly those heavily exposed to China like Apple and Tesla. Shares in most of the so-called Magnificent Seven (Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla) are mostly down this year.
