Reuters is to cut a further 500 jobs in response to a continuing slowdown in growth and a downward revision in revenue forecasts for the fourth quarter.
The new round of job cuts comes on top of 1100 redundancies announced in July, and will help achieve annual savings of £220 million by 2003.
The tightening of costs came as the news and information vendor reported four per cent growth in third quarter revenues to £920 million pounds, in line with market forecasts.
A good performance at Reuters Financial, where underlying revenue grew by 5%, was offset by the impact of weaker trading conditions at Reuterspace and at Instinet, the group’s 83%-owned subsidiary, which reported a one per cent fall in quarterly revenues to £187 million driven by the prolonged market slump and trading shutdown in mid-Septmber.
The introduction of Nasdaq’s Supersoes system during the third quarter also contributed to a decline in Instinet’s market share in Nasdaq-quoted trading. Instinet’s share of Nasdaq-quoted trading volumes was 13.5% in the third quarter, up from 13.1% in the comparable period of 2000, but down from 15.3% in the second quarter of 2001.
In more detail, revenue in Reuters Financial rose six per cent to £674 million in the third quarter compared with the same quarter last year.
Reuters Information revenue grew five per cent to £461 million, bolstered by solid growth in Europe and in the United States. Sales of the flagship Reuters 3000 Xtra increased to 48,000 units.
Revenue from Reuters Trading Solutions grew nine per cent to £213 million. Strong solutions sales helped offset a decline in Transactions revenues, says the company.
Reuters senior management is meeting with analysts to outline a two-phase programme to reshape the business along customer lines, with the aim of achieving double digit earnings growth and operating margins of 17% to 20% over the next five years.
However, new CEO Tom Glocer cautions that the first phase of the realignment will have a minimal impact on revenues, with earnings growth arising primarily from cost savings.