No sale news at Reuters
RECOVERY could be underway at Reuters after the company announced that revenues from its trading screens and financial information business are now declining at the slowest rate for three years.
The company, whose key business is the sale of information systems to banks and financial institutions, said that underlying recurring revenues fell to £530m, a drop of 1.4% in the first quarter. This compares with an 8.4% slump in the same period last year ? the company itself had predicted a drop of 1.5% for the first quarter.
The improvement reflects the fact that the US banking industry is picking up, hiring more staff who all need access to real-time market information. Although the trading update marks a significant step on the step to recovery for Reuters, City observers expressed disappointment that there was no news on the sale of its electronic broking arm Instinet.
Reuters said it remained in discussions with potential buyers of Instinet, in which it holds a 52% stake. Speculation has been mounting over recent days that it would use today's trading update to announce the sale to Nasdaq, the US high-tech securities market. The price tag expected for Instinet is $1.8bn.
This is somewhat lower than the $1.9bn-2.0bn value put on the business in the past by analysts but still seen in the current climate as a good deal for Reuters and one that would give it some £600m to put towards the savings targeted by chief executive Tom Glocer.
He hailed today's trading figures as a positive sign and expressed confidence about the company's outlook: 'We have made a good start to the year with positive net sales in every month,' he declared, adding that the second quarter's revenue change could be close to zero. If it is, this will be the first time Reuters' recurring revenues have not fallen since the third-quarter of 2001 when financial markets plunged into turmoil following the 9/11 terrorist attacks.
