Reuters slips on slack sales
22 July 2003 | 5182 views | 0
Shares in Reuters have dropped by 6.5% in early trading amid concerns over sagging sales, despite a better-than-expected return to operating profit.
The troubled news and information group is reporting pre-tax profits for the half year to end-June of £16 million, against a loss last year of £88 million.
Group revenue for the first six months was down 12% to £1.35 billion and recurring revenue slipped 10% to £1.25 billion, in line with expectations. The company has firmed up its forecasts for a decline in recurring revenue for the full year to 11%, a marginal improvement over the previous guidance of 10-12%.
Shares in the group slipped by 13.75 pence to 204.25 pence in early trading as the markets saw little sign of an improvement in sales.
Reuters has raised its cost-cutting target for the year to £55 million from the £45 million announced under the fast-forward programme, under which the company plans to shed some 3000 jobs over the next three years. Over 700 employees left the company in the first half.
On the contract front, Reuters is reporting a deal with Lehman Brothers to roll out its new desktop workflow product Reuters Knowledge, and the revision of an existing contract with Goldman Sachs to include flagship products, 3000 Xtra and Bridgestation Plus, among others. This enterprise-wide contract complements the agreement reached earlier this year for Reuters to provide Reuters Market Data System (RMDS) as a replacement for Triarch and TIB products in the Goldman Sachs market data infrastructure.
Revenue at Instinet, Reuters' majority-owned inter-dealer broker, declined to £275 million for the six months from £301 million, while losses narrowed to £25 million from £83 million. Instinet has signalled a major restructuring to seperate the company's buy-side and sell-side businesses in an effort to add "clarity" to its market propostion.
Under the plans, the buy-side business will be a global value-added brokerage (VAB) that seeks best execution on behalf of its customers. Instinet's sell-side business consists of an alternative trading system (ATS) comprising the Instinet and Island ECNs and their clearing broker, Instinet Clearing Services.
Alex Goor, previously EVP for strategy and planning, will lead the ATS. The VAB will be headed by an interim joint management team consisting of Ed Nicoll, Instinet's CEO, alongside Mike Plunkett, formerly head of Instinet's hedge fund group, and Natan Tiefenbrun, formerly responsible for products & services for quantitative money managers. Implications for general staffing and personnel have yet to be ironed out.