Tom Glocer might have stayed longer but for 'bad luck and overconfidence'
Thursday 8 December 2011
Tom Glocer might have stayed longer as Thomson Reuters chief executive were it not for a mix of bad luck and overconfidence, The Economist said on Thursday.
Glocer, whose retirement was announced a week ago, brought Reuters from the verge of bankruptcy to a state of rude health during seven years as the organisation’s CEO, the weekly said. “But he has done less well as chief executive of Thomson Reuters, the company created when Thomson, a Canadian purveyor of professional information for lawyers, accountants and others, bought Reuters in 2008. Bloomberg, the firm’s American rival, has almost wiped out its once-clear lead.”
New information platform Eikon, launched last year to compete with terminals offered by Bloomberg, has been taken up by just 8,000 out of Thomson Reuters’ 400,000 financial-data subscribers, The Economist said.
“Thomson Reuters and Bloomberg are the big fish in the professional-publishing pond, at least eight times larger than their nearest competitor. Bloomberg, besides expanding its terminals business, which has over 300,000 customers (at about $20,000 a pop), is pushing into government-related news and data…
“So what happened to Mr Glocer’s winning streak? His allies say his departure was always just a matter of time: once a firm buys another, it completes the takeover by putting its own people in charge. The Thomson family still owns 55% of the company, and some think the generous price [$17.2 billion] Mr Glocer secured from Thomson for Reuters made him all the more vulnerable.
“But he might have stayed longer were it not for a mix of bad luck and overconfidence. Eikon, intended to replace Reuters’ grab bag of services with a single offering, was designed to be more user-friendly than Bloomberg’s devices, but it was launched hastily and with flaws. With hindsight, a more gradual upgrade might have been more prudent.”
Perhaps Glocer’s replacement James Smith can do better, The Economist said. “He will almost certainly have a freer hand, and some upgrades to Eikon are planned for next year. But these are still stormy seas.” According to Claudio Aspesi, an analyst at investment bank Sanford C. Bernstein, it took most professional-publishing firms three to four years to recover from the 2001 recession. This time, Bernstein predicts, revenue growth at Thomson Reuters will not reach pre-crash levels until at least 2015.
One area of potential growth, though, is trading services. Changes in financial regulation in America and Europe will force a lot of trading in derivatives from the murky world of private “over-the-counter” deals onto exchanges, where contracts will be standardised and prices quoted. This presents both Thomson Reuters and Bloomberg with an opportunity to gather and sell data on these markets and perhaps to capture a share of the trade by linking banks and their clients through their own electronic trading platforms. The market for these derivatives is gigantic. A competitive edge there could make a big difference to both companies’ fortunes. ■
- The Economist