Market data rivals battle for share of wallet as terminal sales wilt

Market data rivals battle for share of wallet as terminal sales wilt

In an unprecedented announcement, Bloomberg has admitted to a fall in terminal numbers, revealing a four per cent drop from November last year. The statement was released late Tuesday, the day before the publication of second quarter 2009 results from Thomson Reuters, which highlight the positive outlook in the diversified vendor's non-financial services professional division.

For the fixed income market the Bloomberg terminal has long been a required market data expense. However, in the current economic environment many banks, in an effort to reduce costs, have been systematically routing out unused, redundant, or not-exactly-required, expensive Bloomberg Terminals.

There is a cottage industry of third party services which offer banks software to monitor the network specifically for unused Bloomberg data. This March, Societe Generale signed an agreement with Nyse Technologies to use its Data Access and Reporting Tools (Dart) Usage Analysis for Bloomberg terminals as part of its market data cost reduction programme.

Bloomberg told the Financial Times that its total terminal numbers fell by 11,470, or four per cent from a peak last November of 268,800. Sales of the black screens had been growing at 25,000-30,000 a year. The fall in terminal numbers has caused Bloomberg to make one-off payments to staff whose pay packages would otherwise have come in more than 20 per cent below expectations. The certificates it gives employees in place of share options, are valued by the rises and falls with net terminal installations.

The FT reports that in a presentation to employees yesterday, Bloomberg blamed "removals" by large firms for the fall in terminal numbers. However, the vendor also said the losses were offset by strong order flow from "tier two and tier three broker-dealers" and smaller hedge fund start-ups.

For the past few years Bloomberg has been fighting the conception that the Terminal is merely for use by bond traders; fielding account managers to train bank customers in the full line up of functions and instruments available within the Bloomberg system. The vendor has been using that same strategy to fight against removals in the name of cost cutting.

Bloomberg also said at the employee presentation that revenues over the past 12 months have risen, from $5.8 billion to $6.2 billion. This might be a result of the long subscription times required of Bloomberg clients.

Meanwhile, Thomson Reuters posted $3.3 billion in revenue for ongoing businesses across the group for the three months ending June 30, 2009.
However, while Thomson Reuters Professional Division, consisting of legal, tax & accounting and healthcare & science posted positive results, the core markets division showed a seven per cent decline. The division, which consists of sales & trading, investment & advisory, enterprise and media, reported revenue of $1.9 billion for the three months ending 30 June, 2009, down from the $2.1 billion posted in the year earlier period.
Despite the drop in overall revenue, Thomson Reuters enterprise division rose seven per cent against strong results from a year ago, when organic revenues grew 14%. Enterprise sales continue to benefit from strong customer demand for reference data, independently validated pricing services and data to automate front, middle, and back office applications.
Revenues for sales & trading decreased one per cent due to lower foreign exchange transaction volumes, a six per cent decline in recoveries and a drop-off in desktop sales, offset by growth in commodities & energy and Tradeweb.
Revenues for investment & advisory were unchanged for the quarter. However, the vendor reported a high demand for among mid-sized and boutique investment banks.
CEO Tom Glocer comments: "Our revenues continued to grow in both the professional and markets divisions, which is a testament not only to the choice and balance of the markets in which we operate, but also the strength of our franchises in the challenging financial services and legal segments."

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