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Market Turmoil Trouble for Thomson Reuters

By    |   Monday, 03 Oct 2011 03:13 PM

Thomson Reuters (TRI), one of the world’s biggest financial and professional publishers, has some good tidings and some not so good. The professional division, which includes legal, tax, and accounting, is performing swimmingly and should suffer little from discarding its healthcare publishing segment.

Revenue for the professional division, which accounts for 40 percent of the company’s sales, gained 8 percent in the second quarter from a year earlier, and its operating profit margin was unchanged at a healthy 26.3 percent.

The legal publishing segment, which provides about 25 percent of revenue, tops all competitors in the United States for supplying information to law students, lawyers, and legal support staff.

In the markets division, which provides information to financial professionals and accounts for 60 percent of the company’s revenue, the news isn’t so great. Turmoil in financial markets and sluggish profits at banks have lessened demand for the company’s terminals. Revenue for the markets division rose just 1 percent in the second quarter from a year earlier.

Thomson Reuters is having trouble, too, selling its new Eikon desktop. The company reported sales of more than 28,000 Eikon terminals from their launch in September 2010 through the second quarter, with only about 3,500 going to new users. So of the roughly 500,000 Thomson Reuters subscribers, only about 24,500 have moved to Eikon.

The company’s revenue totaled $3.2 billion in the second quarter, up 4 percent from a year earlier, excluding currency effects. Underlying operating profit jumped 17 percent to $669 million.

Mild growth

Standard & Poor’s analyst Efraim Levy has a hold rating on Thomson Reuters shares. He expects revenues to rise at a mid-single digit rate this year and next, excluding acquisitions and divestitures.

“We believe operating margins will benefit as more savings are realized from the company's Thomson-plus efficiency initiative and a reduction in corporate expenses,” Levy writes.

“In addition, we see acquisition synergies and contributions from the rollout of selected new products and platforms boosting the operating margin, partly offset by investment in other new products and product launches.”

The company next reports around Nov. 1.

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Thomson Reuters (TRI), one of the world s biggest financial and professional publishers, has some good tidings and some not so good. The professional division, which includes legal, tax, and accounting, is performing swimmingly and should suffer little from discarding its...
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2011-13-03
Monday, 03 Oct 2011 03:13 PM
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