Thomson Reuters 'may struggle'

The balance sheets of financial services corporations are bleeding red ink due to massive writedowns on credit derivatives and mortgage instruments, and companies have laid off tens of thousands of employees this year.

“This means fewer traders needing access to Bloomberg or Thomson Reuters screens,” it said.

Robert Iati, partner and head of global consulting at Tabb Group, said data vendors fare poorly when the financial industry goes into cost-cutting mode. More ominously, financial services firms have been cutting data aggregators in favour of direct market feeds to avoid latency or trading delays. “This is not good for the status quo, but it does give them every reason to improve their own products,” Iati said.

Because of its more diverse client base, Thomson Reuters as a merged entity argues it may be better suited to seeing off a downward economic cycle than if each firm was on its own.

Debra Walton, global head of market development, said: “Clearly anyone in financial markets has an eye on the state of the market and the economy. We feel much more comfortable about our ability to be able to deal successfully with the economy now that the merger has taken place.”

Adam Honoré, senior analyst with consultancy Aite Group, agreed that the merger might help them weather the storm. He said: “The Thomson institutional-type business has hardly hiccupped, but for the traditional Reuters business the number of terminals is definitely declining.” ■