Reuters shares slipped 2% in early London trading after a 7% rise in the last month. "(The sales were) very good, but the market knew this already," said Alex De Groote, an analyst at Panmure Gordon. He said the stock is expensive and a geared play on the broader stock market.
The rival to Bloomberg L.P. said it was helped both by new sales and by migrations to more advanced products during the quarter.
Reuters posted sales growth of 7% in its key terminal, Reuters 3000 Xtra, because of new users, customer migration from older products and price rises. Usage revenue from electronic trading increased 20% during the quarter, with growth particularly coming in the foreign currency market. Reuters has a reputation of being stronger than Bloomberg in the currency market, while Bloomberg's strength is in the credit markets.
The company's acquisition of Telerate actually hurt Reuters' top-line during the quarter, as some customers had previously used Telerate as a back-up service to Reuters. Reuters also reported increasing revenue from its research and asset management division, where sales gained 15% on the back of rising take-up of its Reuters Knowledge products and from Lipper's further extension into hedge fund research. Continued demand for machine-readable data, as well as for historical data, drove a 6% revenue rise from its enterprise division.
The large sell-side firms and hedge funds are driving demand for those products, Reuters said. Media revenue edged up 3% on the back of growth in its online syndication business. The online growth offset declining TV usage revenue.
Reuters separately reported it was selling its 50% stake in Factiva to partner Dow Jones Co. ( for $160 million. The sale and other arrangements as a whole are expected to be neutral to Reuters' adjusted earnings in 2007 and 2008, which exclude profit on disposals among other items, the London-based company said.
Reuters will continue to supply news to Factiva and has agreed not to compete with Factiva's core business for a two-year period. Steve Goldstein is MarketWatch's London bureau chief.
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