Monthly Archives: February 2010

Thomson Reuters results

More results today – this time from Thomson Reuters.

On the surface they are fairly similar in trends to those of Reed Elsevier that I covered last week – pressure on headline revenues, significant cost cutting and highlighting the ‘late cycle’ nature of the business. However, when I listened to the results presentation this afternoon I came away with a very different perception of the business.

Whilst it is obviously a much larger business that Reed Elsevier, Tom Glocer and his team gave a very measured performance on their call. Their message was similar with the same period last year. There was stability and a consistent strategy of product investment for growth in the medium term.

Some of the things they highlighted were:

  • WestLawNext – Tom said that results were coming through well and that WestLaw had achieved it’s best sales in the last quarter since Q4 2007. He said that in a period of market difficulties that it was great for sales teams to have something new to sell. Since it launched earlier this year he claimed that 400 new sales had been secured in the first month and that he was confident of a significant uplift in market share.
  • Transition from print to online – In what sounded like a bit of dig at the competition Tom said that they had been slower than organisations like LexisNexis in transitioning products from print to online. He inferred that LexisNexis had made a mistake in abandoning print aggressively and early. He said that Thomson Reuters had ‘managed the transition without the chasms of profit drop out’ and that there were elements of their portfolio that remained better suited to print.
  • Utah – Thomson Reuters’ new standardised desktop platform was another example of the company’s investment. It was running a bit behind schedule but currently ‘in alpha’.

Overall, I took away  a lot more confidence in Thomson Reuters’ strategy than I did from the Reed Elsevier call last week. They obviously still have a lot of market pressures on various parts of their business but the positioning of the company for growth in 2011,2012 and beyond sounded believable and robust.

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Thoughts on the Reed Elsevier results presentation today

It’s results season again and one of the biggest business information companies have just announced their results this morning. Reed Elsevier are an organisation that have really gone through the mill over the past couple of years. Let’s remind ourselves of what has happened in this venerable company:

  • 3 Chief Executives – Sir Crispin Davis left this time last year to be replaced by a non-media man, Ian Smith. Ian lasted just 9 months and was replaced by Erik Engstrom the head of the Elsevier division.
  • 1 huge acquisition – Choicepoint at a relative high point in the market
  • 1 failed disposal – the Reed Business Information business was publicly put up for sale, then withdrawn from sale and now seems to be being sold off piecemeal
  • 1 major notes issue – to reduce debt after the acquisition of Choicepoint and failed sale of RBI

Torrid times for any company – even one with a solid range of defensive subscription income.

On the surface of things the results that they announced today seemed not too bad but having listened to their presentation webcast this morning it is easy to see why they have under-performed the sector by 30% since the start of the global downturn.

It is clear that the changing strategy in relation to RBI has been hugely damaging. A business that was already in severe structural decline was left rudderless during the prospective sale. It has then had to radically cut costs in the face of a collapse in revenues (18% down on the year). I would imagine that it has been a brutal time to work there and the continuing uncertainty of headcount reductions, closures and sales cannot be providing a great environment.

Even worse than the performance of RBI has been the downturn in the Reed Exhibitions markets. Here revenue is 22% down on the year which is not really surprising given that a lot of exhibiting companies would have been making re-booking decisions during the high-points of market uncertainty. Erik was keen to emphasise that the problems in exhibitions were cyclical rather than structural. This is partly true but once large companies have taken a decision to drop from major industry shows it is often hard to get them back.

Whilst the poor performance of RBI and RE had been flagged up and was expected, the real underlying concern I picked up from the presentation was the longer term worry about LexisNexis. It wasn’t stated but there seemed to be a general feeling from the Q&A that there were severe competitive pressures on the LexisNexis platform as a result of the Thomson Reuters investment in WestlawNext.  I suspect that this is causing them a lot more concern than they were letting on.

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