Do things add up for Thomson Reuters?

John Jannarone of The Wall Street Journal writes Wednesday about Thomson Reuters, the parent company of the Reuters financial news service, and whether the company can face up to its competitors.

Jannarone writes, “The chief rival is Bloomberg, whose sales and pricing power held up even through the recession. And while its main service is more expensive than Eikon, many users are hooked on features like Bloomberg’s messaging service, a popular means of communication on Wall Street.

“Smaller rivals include FactSet Research Systems and McGraw-Hill‘s S&P Capital IQ. They focus on services that are often less expensive than Eikon but have enough capabilities for the needs of many users. FactSet’s revenue rose to $806 million in the year through August, from $576 million in 2008. Capital IQ’s revenue from market-data products grew to $610 million in 2012 from $412 million in 2008, Mr. Taylor estimates.

“Even keeping existing Thomson Reuters customers may be tricky, especially if the company tries to convert them to a more-expensive Eikon package. One potential solution of offering discounts to encourage upgrades could erode margins.

“Meanwhile, Thomson Reuters’s legal group, which accounts for about a quarter of revenue and an even higher percentage of profits, is also under pressure. Its cornerstone is Westlaw, a research system for legal professionals.

“As with banks, law firms have looked for ways to save since the recession.”

Read more here.