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Bloomberg v Thomson Reuters battle about to get bloodier - WSJ

Retrenchments on Wall Street are likely to hurt the market for financial data, intensifying competition between Bloomberg and Thomson Reuters, The Wall Street Journal reported on Monday. Steps the two firms took to diversify in the aftermath of the 2008 financial crisis are being tested.

The $23.7 billion global market for financial data is expected to grow only about two per cent this year, according to market data research and consulting firm Burton-Taylor International Consulting, down from 4.2 per cent growth last year, the Journal said. While the market shrank slightly in 2009, it grew in the low double-digits from 2006 to 2008.

These businesses tend to ebb and flow with Wall Street employment. The global finance industry is downsizing as firms brace for a prolonged slowdown due to weak growth, tighter regulations and instability in Europe.

Bloomberg so far has managed to sharply outperform the broader market. It expects 2011 revenue to rise about 11 per cent to $7.6 billion, chief executive Dan Doctoroff said. Revenue rose 10 per cent last year, when the company topped 300,000 subscribers to its terminal, a bundle of financial data, tools and news that costs subscribers about $20,000 a year. Thomson Reuters offers its comparable product for about the same price, though cost varies depending on features, the Journal said.

It said Burton-Taylor estimates Bloomberg lifted its share of the overall market to 30.3 per cent last year from 25.1 per cent in 2005. In contrast, Thomson Reuters’ share slid to 33.2 per cent last year from 37.4 per cent in 2005. Thomson Reuters’ stock is down about 20 per cent year-to-date.

Bloomberg executives said the company likely will slow hiring in 2012 after increasing the size of its work force by about 35 per cent over the past three years. “We feel like we need to give the organization a little more time to breathe,” Doctoroff said.

Thomson Reuters’ financial services business, which has a little more than 400,000 customers of various desktop products, increased revenue 5.5 per cent to $5.64 billion in the year’s first nine months.

“The financial-services division, which accounts for just over half of Thomson Reuters’s revenue, has stumbled amid the disappointing performance of Eikon, its new desktop offering for financial professionals,” the Journal said. “The product now has about 8,000 active users a year after its launch, which it said was slower than expected. Executives said recently that a recent reorganization of the Markets division is likely to improve sales in 2012, though it won’t drive revenue growth in Markets until 2013.”

Chief executive Tom Glocer said Eikon started slowly in part because the product wasn’t ready for “every type of user at every institution”. An upgrade is pending. He also said Eikon was just one of several investments that overall have helped revenue in markets edge up in the most recent quarter ended 30 September.

Meanwhile, the professional division, which serves the legal, tax and accounting industries, increased revenue by 10 per cent to $3.93 billion during the first nine months.

“Thomson Reuters, Mr. Glocer said, has recognized for a long time the trend toward ‘fewer bums on seats’ in the financial-services sector and has shifted dollars to fast-growing areas such as governance risk and compliance, which helps financial institutions cope with growing regulatory burdens,” the Journal reported.

“I think we’re well positioned even in a downturn because of the other weapons we have,” Mr. Glocer said. Thomson Reuters spent about $850 million last year on acquisitions across its businesses. ■

The Wall Street Journal