By mid-afternoon BST, Reuters stock had tumbled to 168 pence, a 19% decline on the overnight close of 208 pence.

The company has seen its core recurring revenues devastated by investment banking cutbacks and a collapse in profits at one-time cashcow Instinet. The electronic interdealer broker this morning reported a 25% drop in third quarter revenue to £141 million.

Introducing the results, Reuters CEO Tom Glocer comments: "Our customers are enduring the toughest market conditions for decades, and recent weeks have seen further sharp declines. Looking ahead, we see market conditions worsening as financial services firms retrench still further. As a result, we expect our recurring revenue to decline by between seven percent and nine percent in the first half of next year."

Reuters reported revenues of £855 million pounds for the three months ended 30 September, compared with market concensus estimates of around £880 million. Core recurring revenues fell 5.7 percent, at the upper end of internal forecasts, while outright revenue dropped 38%. Underlying recurring revenue in the second half is expected to fall further still, down by 6% to 7% against earlier optimistic forecasts of a 5% to 6% decline.

Glocer attempted to put a shine on the results, noting that the company is on target to meet a core operating margin of 12% for the year, although he declined to provide a forecast for next year. He says Reuters is continuing its product rationalisation programme and looks set to beat cost-cutting targets of £250 million for the year. He also holds out hope for the next-generation of products, such as the new version of 3000Xtra and Reuters Messaging, which are expected to halt recent advances by rival vendor Bloomberg in the market for premium news services to financial trading floors.

Says Glocer: "Reuters is financially strong, and we are making good progress in our business transformation. We are strengthening our competitive position with new products and service improvement and reshaping the core business to be leaner and more efficient, with a view to longer term margin improvement."

In more detail, revenue from Treasury was £244 million, down 3% on an underlying basis, and down 5% on an actual basis due to currency movement. Revenue from Treasury information products grew 4%, with strong sales of 3000 Xtra partially offsetting a 7% decline in revenue from conversational Dealing that reflected customer consolidation and branch closures. Outright revenue was down 44% to £10 million due to customer reluctance to commit to IT investment in the current environment.

Longer-term trends for Treasury solutions sales are more positive, says the company, with customers under pressure to improve their risk and credit management systems – areas where Reuters continues to invest. Usage revenue from Treasury broking services was up 5% in underlying terms as increased volatility in foreign exchange markets increased activity in spot and forwards matching.

Revenue from Investment Banking and Brokerage (IBB) was £203 million, up 3% on an actual basis due to the addition of revenue from Bridge, but down 15% on an underlying basis. Activity in both equity and fixed income markets slowed markedly during the third quarter. headcount reductions in larger global investment banks have led to cancellations of 2000/3000 series information products - partially offset by growth in revenue from 3000 Xtra. The 47% decline in outright revenue reflects project cancellation and deferral.

Asset Management revenue was unchanged at £163 million after including revenue from Bridge. Revenue from this customer segment came under pressure in the third quarter, showing a 7% underlying decline as asset management firms engaged in heavy cost cutting including headcount reductions. Recurring revenue was down 5% on an underlying basis while outright revenue was down 31% in the quarter.