After disappointing results and slowing growth this year, Thomson Reuters Corp. chief executive officer Tom Glocer is taking direct control of the company’s largest division in an attempt to reverse its fortunes.
Thomson Reuters is reorganizing its markets division, which includes both the well-known Reuters newswire service and financial data designed for use by banks, money managers, traders and analysts. Revenue for the division, which makes up about 55 per cent of the company’s sales, rose just 1 per cent in the second quarter, the company said Thursday.
The earnings report comes after a management shakeup last week, including the departure of the former head of markets, Devin Wenig, and the president of Reuters Media, Chris Ahearn. Mr. Ahearn will be replaced by the former president of global investment at the company, Susan Taylor Martin.
Mr. Glocer said he has been concerned about the slow growth since the beginning of the year. “When those trends didn’t reverse in the second quarter, I felt it was time to act,” he said in an interview.
According to reports, the board – and in particular controlling shareholders the Thomson family (whose holding company, Woodbridge Co. Ltd., also owns The Globe and Mail) – were also concerned about results at the markets division.
Mr. Glocer taking charge of that unit is a signal of how much importance the board places on turning that business around, analysts said. The move is also seen as a consequence of the fact there was no successor being groomed to follow Mr. Wenig in the position.
Thomson Reuters had total revenue of $3.2-billion (U.S.) in the three months ended June 30, up 4 per cent excluding the impact of currency changes. Underlying operating profit rose 17 per cent to $669-million, compared with $573-million in the same period last year. That growth was driven by the professional division, which provides information products for legal and accounting firms, among others.
The company faces a challenge in boosting its growth, since the slow economic recovery has affected the financial firms that make up a large proportion of its customers in the markets division. Mr. Glocer cited the stalemate over the U.S. debt ceiling and the credit crisis in the EU as unforeseen difficulties for the business.
“We believe that the changes in markets introduce some near-term uncertainty, but could ultimately help the division return to stronger growth,” Morgan Stanley analyst Suzanne Stein wrote in a research note Thursday.
Thomson Reuters is in the midst of rolling out its newest financial data and new product, called Eikon, which is aimed at the financial industry. Since the launch of the new product last September, only 15 per cent of its existing clients have adopted the new product. But with total sales of 28,000 desktops so far, Mr. Glocer said, the company is ahead of where it thought it would be.
Eikon has a simpler design and is easier to search than previous products, Mr. Glocer said. The company is also planning to make it available on mobile devices. Thomson Reuters has just hired Philip Brittan away from Google, where he worked on the Google Finance website and mobile products. Before that, Mr. Brittan worked at Thomson Reuters’ competitor, Bloomberg.
“We’ve put him firmly in charge of the product development effort on Eikon,” Mr. Glocer said. “He brings that view of the world [from Google] So it will only get cleaner, simpler, and more consumer scalable.”
Thomson Reuters reaffirmed its outlook for this year. It expects total revenue for the company to grow “in the mid single-digit range.” In the first six months of the year, revenue has grown 4 per cent.
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