3rd UPDATE:Thomson Reuters 4Q Net Up 51%, Sees Higher 09 Revenue
24 Febrero 2009 - 2:13PM
Noticias Dow Jones
Thomson Reuters Corp.'s (TRI) fourth-quarter net income jumped
51%, thanks largely to its April purchase of Reuters, though the
combined company reported strength at its professional
division.
The business information giant appeared to weather the effects
of the global financial crisis and economic downturn in a quarter
when market conditions deteriorated sharply. Moreover, it offered a
forecast for 2009 that signaled confidence it can continue to show
resilience, despite the ongoing meltdown in the financial industry
- a key source of clients for Thomson Reuters.
Thomson Reuters also boosted its quarterly dividend 3.7% to 28
cents. As a result of that and the better-than-expected earnings,
the company's stock recently rose 10.3% at $24.90. Before Tuesday,
shares had fallen nearly 40% since the deal's close last April.
On a conference call with analysts, Thomson Reuters Chief
Executive Tom Glocer said investors should expect subscription
cancelations from some clients in the financial sector and
elsewhere, but he said the company has picked up new business from
the likes of Barclays and Nomura even as firms like Bear Stearns
and Lehman Brothers have disappeared, allowing it to retain the
lion's share of its business.
Glocer also said the U.S. government is unlikely to allow major
banks like Citigroup Inc. (C) and Bank of America Corp. (BAC) to
fail, reducing the risk it could lose business from major financial
institutions, and he expects activity in the legal profession
resulting from financial frauds like the alleged misdeeds of Bernie
Madoff to boost the company's professional division.
"We expect to see more and more litigation in 2009," Glocer
said.
The company said it expects revenue to grow in 2009 based on
current market environments, projecting a rosier scenario than
investors were anticipating. Analysts surveyed by Thomson Reuters
had expected a 3% drop to $13.13 billion.
The company also said it expects its underlying operating margin
to hold steady for the year, supported by revenue growth and
expected savings from its recent merger, and it expects its
underlying free cash flow to be comparable to 2008, adjusted for
"certain timing related items."
Thomson Reuters' markets division has been a concern for
investors as the financial industry reels from the collapse of
major investment banks. Some analysts had predicted the company's
revenue will fall in 2009 as job and budget cuts pervade the
industry.
"There are still some risks going forward if the downturn
continues to worsen, but [Thomson Reuters] managed to demonstrate
with these results that they have a must-have product that brings
in a lot of recurring revenue that are locked in regardless of the
cycle," said Efraim Levy, equity analyst with Standard &
Poor's.
Levy responded to the report by raising his Thomson Reuters
earnings estimate for 2009 to $1.96 a share from $1.81, and he
hiked his 12-month target price on the stock to $29 from $28. Levy
maintained his hold rating on the shares.
Thomson Reuters posted net income of $657 million, or 79 cents a
share, up from $434 million, or 67 cents a share, a year earlier.
The company said its earnings adjusted to factor out the effects of
the merger and other non-recurring items were 57 cents a share for
the quarter, beating expectations on Wall Street for earnings of 43
cents a share on that basis.
Revenue increased 68% to $3.41 billion on the merger. Assuming
the deal had closed prior to the year-earlier quarter, revenue
would have been flat, or up 5% excluding currency fluctuations.
Glocer said the company continued to perform well as major
economies slid into recession last year while also being able to
accelerate the integration of Reuters and increase savings it
expects to achieve.
"Costs are coming out of the business faster than we
anticipated, and revenue is starting to flow as we leverage our
global size," Glocer said.
Thomson Reuters' professional business saw 3% revenue growth, or
6% minus currency impacts, on gains in online, software and
services revenue. Profit rose 8%. The legal segment, which includes
the Westlaw research service, reported a 1% increase, or 6%
excluding currency impacts. The gains were led by international
online products and growth at Westlaw. Earnings climbed 4%.
About 60% of Thomson Reuters' revenue comes from its financial
information services unit, with the rest generated from the
professional operations such as legal and tax and accounting.
At the markets business, revenue dropped 2% on a pro-forma basis
as currency fluctuations hurt the top line. Earnings rose 7% on
higher margins.
-By Nat Worden, Dow Jones Newswires; 201-938-5216;
nat.worden@dowjones.com
(Kerry E. Grace contributed to this story)