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To: maceng2 who wrote (197721)	10/16/2002 8:43:29 AM
From: maceng2	Read Replies (1) \| Respond to of 436258

Reuters shares dive on revenue warning news.ft.com By Carlos Grande in London Published: October 16 2002 8:46 \| Last Updated: October 16 2002 8:46 Shares in Reuters fell over 20 per cent as the electronic information group warned core subscription revenues were falling faster than expected. Reuters said subscription revenues, which account for 91 per cent of its revenues, could fall by 6 to 7 per cent in the second half as clients cancel contracts. Less than a month ago, Tom Glocer, Reuters chief executive, said it was on track to meet earlier guidance of a decline in subscription revenues of up to 6 per cent. It now forecasts a decline of between 7 to 9 per cent in the first six months of 2003 as banks, fund managers and others cut back. "We are focused on taking our costs down faster than revenues decline." Tom Glocer, Reuters CEO Reuters shares had fallen from 208p to a new 12-year low of 163-1/4p by midday. Analysts are now predicting more job cuts at Reuters after its management promised £30m in extra savings this year and acknowledged that its long-term plan to lifts its margins was threatened by the downturn. The target for gross headcount reductions in 2002 has already risen from 2,750 to 2,850. The pessimistic outlook confirmed analysts' fears of a prolonged trough in revenues at Reuters as financial services groups axe spending and it faces stiff competition from Bloomberg, its privately-owned rival. In the three months to September 30, sales at Reuters core, which includes both subscription and one-off sales of its systems and software, fell by an underlying 8 per cent. This included a 12 per cent year-on-year reduction in the number of its top tier users, with 2,000 orders of the group's flagship, 3000 Xtra system, cancelled while customers waited for installation. At an analysts' conference call, David Grigson, chief financial officer, said that the group had seen "some deterioration" in some sales in October and November. Overall Reuters revenue, which includes Instinet, the Reuters-controlled electronic share trading service, fell 7 per cent from £924m to £857m. Revenues at Instinet, which on Tuesday reported a $528m net loss for the third quarter, slid 25 per cent to £141m. Mr Glocer said: "The bottom line is that we are managing aggressively the things we feel we can actively manage. We are focused on taking our costs down faster than our revenues decline." Among Reuters' core divisions, one-off sales of software and solutions were worst hit, declining by 38 per cent. They are expected to be 20 per cent down in 2002 as cost-cutting banks put schemes on hold. Reuters warned of difficulties in improving future margins - the key target of its long-running restructuring. It said it would hit its margin targets for 2002 and would maintain focus on reducing costs, but refused to forecast long-term margins. Across the divisions, underlying revenues from investment banking and broker customers fell by 15 per cent, and those from asset management by 7 per cent. Treasury revenues, the traditional cash cow for the group, fell by 3 per cent on an underlying basis while the smaller corporates and media division saw a 6 per cent fall.