$3 billion hit pushes Thomson Reuters into heavy loss

The loss for last three months of 2011 was $2.59 billion, a sharp contrast to $307 million profit a year earlier.

The charge reflects turmoil in the group’s markets division, whose flagship desktop product Eikon has not been taken up by as many customers as forecast. That lead the division to report quarterly revenues just one per cent higher at $912 million. The company said there were now 15,000 active Eikon installations compared with 8,000 in September.

Thomson Reuters has suffered in the wake of the financial crisis, with customers in banking and finance laying off tens of thousands of employees and slashing costs.

It was the first quarterly report under James Smith, who took over as chief executive from Tom Glocer on 1 January following a series of management shake-ups.

“We have simplified our organisation; we have strengthened our management team; and we are making progress toward improving our execution capability,” the new CEO said in a statement.

The $3 billion charge was the result of the company’s annual goodwill testing. “This non-cash charge will not impact the company’s normal business operations, nor will it affect liquidity, cash flow from operations or financial covenants under the company’s outstanding public debt securities or syndicated credit facility,” it said.

Overall revenues for the quarter were up five per cent before currency changes to $3.35 billion, thanks to strong sales in the group’s legal and tax and accounting businesses.

Thomson Reuters said it expects 2012 revenue to grow in the low single digits.

“The guidance is prudent, as it should be,” Claudio Aspesi, senior analyst at Sanford Bernstein, told Reuters. “My concern is that headwinds in financial services will be very hard because employment will continue to be under pressure. Financial markets and legal both will be under continued revenue pressure in 2012 and beyond. At some point the question of whether the cost structure is in line will have to be answered,” he added.

Thomson Reuters said it intended to sell three businesses: Tax & Accounting's Property Tax Services; Legal's Law School Publishing business; and Financial & Risk's eXimius business, which is part of the Retail Wealth Management organisation. The three businesses combined had about $155 million of revenue in 2011. ■