By: Andrew Vanacore, Associated Press Business Writer
News and information provider Thomson Reuters Corp. said Thursday its second-quarter net income fell 8% on weakness in its legal and markets divisions.
The company is still recovering from last year’s economic downturn, which put a crimp in budgets at many of the law firms and financial institutions that it counts as customers. Because it provides many of its services on a subscription basis, the falloff in new orders last year has continued to drag on revenue.
Still, CEO Thomas Glocer said that Thomson Reuters expects to return to revenue growth in the third quarter. The company believes growth in the second half of the year will leave full-year revenue flat to slightly down.
And Glocer added, “We’re looking for a good recovery in 2011.”
A number of factors hurt profit margins in the most recent quarter, including acquisition costs, foreign currency swings and expenses related to bringing out new products.
Thomson Reuters is betting on a broad set of new offerings to help seed future revenue, including five that already launched or are set to launch this year. Among those already on the market is WestlawNext, the latest version of the company’s legal research service, and Elektron, a new software program that provides data for securities traders.
For the second-quarter ended June 30, Thomson Reuters booked earnings of $290 million, or 35 cents per share, down from $315 million, or 38 cents per share, a year earlier.
Stripping out one-time items, the company says it would have earned 47 cents per share, down from 58 cents.
Revenue in the April-June quarter slipped 2 percent to $3.22 billion.
The results fell slightly below Wall Street expectations. Analysts surveyed by Thomson Reuters were looking for earnings of 48 cents per share and revenue of $3.23 billion, on average.
Thomson Reuters shares slipped 91 cents, or 2.4 percent, to $37.31 in midday trading.
The company’s Professional division, which includes services for law, tax and accounting firms and for the health care and sciences industries, grew revenue 2 percent to $1.39 billion. However, operating profit slipped 10 percent to $386 million, led by a decline in legal.
In the Markets division, which includes financial products such as trading terminals and the Reuters news service, revenue slid 4 percent to $1.83 billion. The unit’s operating profit fell 25 percent to $319 million.