Reuters results being affected by economy

Aaron Patrick of The Wall Street Journal writes Tuesday that business news and data company Reuters, which is merging with Thomson, is likely to see lower earnings in the next few years because of the credit crisis.

Patrick wrote, “If the Reuters business goes into a downturn, Thomson’s share price would likely suffer. It also would be seen as a rare misstep for the Thomson family, which over 20 years has transformed the company from a chain of regional newspapers into one of the world’s largest providers of business, scientific and legal information.

“Reuters’s main clients are investment banks, hedge funds and other finance-related employers. If layoffs hit that sector in the next year, as many expect, demand could weaken for Reuters terminals, which deliver news, stock prices and trading data for hundreds or thousands of dollars a month. (Dow Jones Newswires, a unit of Dow Jones & Co., publisher of The Wall Street Journal, competes against Reuters as a provider of news.) Mr. Glocer says he hasn’t seen a sales decline. A Reuters spokeswoman declined to discuss individual clients. Reuters was hurt by the last U.S. recession, when revenue fell 17% to £3.24 billion in 2003 from 2001.

“David Anderson, owner of Atradia Consulting of London, which helps financial-information providers win bank contracts, says some plan to trim outlays on data and news.”

Read more here.