Sapient-related charge tips Publicis into loss before CEO switch

* Publicis (Paris: FR0000130577 - news) hit by 1.44 bln euro charge, N.America weakness

* Ad group paid too high a price for Sapient -source

* Company sticks to margin targets (Adds details, source comments)

By Mathieu Rosemain and Gwénaëlle Barzic

PARIS, Feb 9 (Reuters) - Publicis paid a hefty price for its acquisition of ad firm Sapient on Thursday, with a 1.4 billion-euro writedown on its Publicis.Sapient arm pushing the French group to an annual loss and underlining the challenge for its new chief executive.

The French advertising group paid a 44 percent premium for Sapient, a price that puzzled many investors and analysts when the $3.7 billion deal was struck two years ago after the failed attempt to merge Publicis with rival Omnicom in 2014.

Thursday's total writedown of 1.44 billion euros casts a shadow over the legacy of departing CEO Maurice Levy, as the acquisition was meant to move Publicis closer to competing with companies like Accenture (NYSE: ACN - news) in digital consulting.

This was in stark contrast to larger competitor WPP (Frankfurt: A1J2BZ - news) , which invested heavily in real-time programmatic media buying and is due to report full-year earnings on March 3.

Publicis, the world's third largest advertising company, is preparing for change at the top when Levy hands over in June to 45-year-old Arthur Sadoun who oversees its creative agencies, including Saatchi & Saatchi and Leo Burnett.

And former Sapient boss Alan Herrick, once seen as a potential candidate to succeed 74-year-old Levy, does not appear in a new organisational chart from Jan. 26 which follows a reshuffle of the top management team, a source told Reuters.

Publicis is trying to foster greater cooperation between its agencies and win back big clients lost when several major contracts were renewed in 2015, but still reported weaker than expected sales in the last three months of 2016.

Shares (Berlin: DI6.BE - news) in the group were as much as 5 percent lower and briefly the worst performer of the Euro Stoxx 600 index, after Publicis announced a net loss of 527 million euros.

It said a weaker performance from Razorfish, the digital marketing agency it bought from Microsoft (Euronext: MSF.NX - news) in 2009, was also responsible for the impairment charge in its digital division.

Razorfish, where revenues fell 15 percent in 2016, has been hit by management changes and the death of global chief executive Tom Adamski in October 2015.

U.S. SALES HIT

Fourth-quarter revenue for the group was 2.67 billion euros, an underlying drop of 2.5 percent compared with the same period a year ago, as market conditions in North America, Publicis' number largest region for sales, worsened over the three months.

A Reuters poll had forecast an underlying sales drop of 0.63 percent, but Publicis said political uncertainty around the U.S. election in November had hit advertising for products such as soft drinks and processed foods.

Levy said that the challenges were likely to continue to weigh on sales in the first half of 2017, although Publicis should see underlying sales growth return to the market average in the second half of the year.

Omnicom, the world's second-biggest advertising group, also faced a slowing market in North America, with 0.6 percent underlying sales growth for the region in the fourth quarter.

Despite the setback, Levy stuck to targets set out under the group's strategic plan for 2018, including a yearly operating margin of 17.3 to 19.3 percent. Last year, Publicis' operating margin stood at 15.6 percent.

"It's clear that it's a little bit more difficult... but it's not unachievable," Levy said of the 2018 targets.

Analyst Charles Bedouelle of Exane BNP Paribas said this was not the market view, however, citing the average forecast in operating margin for 2018 of about 16.5 percent. ($1 = 0.9357 euros) (Editing by Bernard Orr/Keith Weir/Alexander Smith)