City File: Saatchi shares stay out of bounds

JUST when you thought it was safe to invest in Saatchi & Saatchi, there comes more bad news. Tuesday's results will show a write-off of pounds 600m worth of good will, carried on Saatchi's balance sheet as part of the value of its subsidiary agencies.

Even ignoring that, the figures will not be impressive. Although there will probably be a return to profits, after last year's pounds 47m loss, any surplus will be marginal and Saatchi still seems unable to make enough money out of its accounts. Its number two agency, Backer Spielvogel Bates, has lost the Rover account in Europe and the Miller Lite business in the US, and Saatchi itself is suffering from cuts at Procter & Gamble. Assuming it can make pounds 25m this year, the shares at 189p trade at more than 70 times earnings. Avoid.