Thomson Reuters: A Precarious Time
November 3, 2012
Last year a slightly off kilter outfit asked me to take a look at Thomson Reuters. At the time we did the work, Thomson Reuters was in the midst of reorganization, an on-again, off-again sale of its health and medial unit (fraud not content), and the pressure from some feisty competitors like BloombergBusinessweek. In my write up, I had used the phrase “eating Thomson Reuters’ lunch” but that was a bit too colorful for those paying the bill.
I read this morning (Saturday, November 3, 2012) the story “Thomson Reuters Battles Slow Sales.” You can find this story in the dead tree edition of the Wall Street Journal, page B4 with the interesting date, November 3-4, 2012. An online version may be available, but you can get the basics of the Thomson Reuters’ situation in this Reuters’ news story, “Thomson Reuters Operating Profit Down, Trading Pressured.” If you want the details with some management polish, check out “Thomson Reuters Management Discusses Q3 2012 Results – Earnings Call Transcript.”
The main idea is that Thomson Reuters is continuing to miss its financial targets. In our 2011 analysis, we identified a number of factors which signaled future difficulties for the company. Among these was the failure of the “synergies” asserted about the marriage of Thomson and Reuters. We also pointed out that Thomson Reuters has a number of communication challenges. Among these are explaining to customers what products and services do and how they differ from other Thomson Reuters’ products, getting messages about the company’s products and services for the financial community through to customers as outfits like BloombergBusinessweek continue to gain traction, and internally among the mind boggling number of units and divisions within the firm. I am not revealing the “good stuff” we identified, but there are some other challenges too.
My view is that with each passing month, Thomson Reuters is slipping. A year ago, drastic action was needed. Now, after one year since we finalized our report, the company’s troubles seem to be growing. What must the company do to make its stakeholders feel secure in their investment?
One answer is electronic products. The precarious situation for Thomson Reuters is that electronic products and services are not producing. Print services continue to be pressured. Now there may be no clear path to growth going forward. Westlaw’s nifty search system is not delivering the anticipated results either. Precarious indeed.
Stephen E Arnold, November 3, 2012
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