2,500 job cuts at Thomson Reuters this year

After a bullish report on the company’s 2012 results and 2013 forecast on Wednesday, chief executive James Smith told analysts that the layoffs will be in the Financial & Risk division. F&R, which produces trading terminals for the financial industry and includes Reuters news agency, accounts for just over half of the group’s revenue.

About 1,000 redundancies will occur from the sale of the group’s previously announced corporate services division to Nasdaq, expected to be completed in the second quarter. Many of the others will come from the retirement of legacy products as the division transfers customers onto its Eikon desktop data and trading platform. Eikon had a hesitant start when it was launched in 2010 and has had a disappointing take-up by clients. A major upgrade was launched only last month.

“These are not easy decisions, but our cost structure has to meet our customers’ requirements,” Smith said on a conference call.

Smith, appointed CEO in January 2012, said the company was halfway through his turnaround plan because of product improvements and stabilisation in Europe and that he expects revenue to rebound. “The success we are having today doesn’t start showing up until next year,” he said in an interview with Reuters. “It’s like night and day. We are in a different place.”

Thomson Reuters 2012 figures and forecast for 2013, and Smith’s bullish remarks that his turnaround plan was gaining traction, failed to impress Wall Street, where the company’s stock closed 2.25 per cent down at $29.96 after recovering slightly from a sharper fall of more than three per cent. The pattern was the same on the Toronto Stock Exchange. The shares hit a 52-week high of $31.18 two weeks ago.

“It looks like another year where the overall growth will be muted,” said Claudio Aspesi, a senior analyst at Sanford Bernstein.

“At the end of the day, 2012 was supposed to be a transition year and now they are talking about 2013,” said Swami Shanmugasundaram, an analyst with Morningstar. ■