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Investors had barely settled into their chairs at the annual meeting in London of Saatchi & Saatchi, the world's largest advertising agency, when Chairman Maurice Saatchi unloaded his uncomfortable secret. The firm's profits, he said, will slump during 1989 for the first time since the agency was founded 19 years ago. Said he: "It's going to be a tough year." Stunned by the abrupt reversal at the juggernaut company, analysts slashed their predictions of its 1989 profits from $280 million to about $165 million. The company's stock plunged, falling more than 15% on the day of the announcement.

Maurice Saatchi attributed the setback to a falloff in the firm's consulting business, along with a decline in U.S. advertising spending. But many investors suspect that the British firm's overall strategy of pell-mell growth, including the takeover of the Ted Bates Worldwide agency for $450 million in 1986, may have created an unmanageable corporate sprawl. After many of Saatchi & Saatchi's takeovers, the acquired firms have lost both executives and clients. Last week's announcement suggests that for Saatchi & Saatchi, building an empire was easier than ruling it.