Reuters: Subscription Revenue Dip Slowing

By: (AP) Reuters Group PLC, the news and financial data provider, said Wednesday that the decline in its core subscription revenues slowed to 1.4% in the first quarter, and that it expects the percentage change to be close to zero in the second quarter.

Subscription revenues, a key indicator of the company's success in selling its main product of news and market data to banks, brokers, and fund managers internationally, came to 530 million pounds ($1.01 billion) for the three months ending March 31. That compared with an 8.4% decline in revenues to 556 million pounds in the corresponding quarter of 2004.

"We have made a good start to the year, with positive net sales in every month and new product launches," said Chief Executive Tom Glocer.

Total revenue for the quarter was 561 million pounds ($1.07 billion), down from 598 million pounds for the year-ago quarter.

Reuters, which does not report quarterly net income, will release half-year results on July 26.

The company said it had experienced three consecutive months of positive net sales for the first time since the first quarter of 2001, and reported steady progress on three new products.

The subscription revenue is more closely watched as an indicator of the company's progress than sales because it only records the revenue from a sale when the product is installed -- a process that usually takes between one and three months.

Reuters has struggled to increase sales against fierce competition from Bloomberg LP and Thomson Financial, while mergers and consolidations in the banking industry have reduced demand for its financial products among banks.

In response, Glocer has led a reorganization of the company, moving jobs to lower-cost regions such as India and selling off assets. The company has targeted total savings of 440 million pounds ($844 million) from the restructuring plan, dubbed Fast Forward, by the end of 2006.

Glocer said Wednesday that the company has made good progress on strategic initiatives.

"Our network services agreement with BT, including the planned sale of [networks business] Radianz, is another key step towards completing our Fast Forward program and the pending purchase of Moneyline Telerate will accelerate our push into the fixed income market," he said.

Reuters said it is continuing negotiations with parties interested in acquiring its online brokerage, Instinet Group Inc. but those talks "are not yet complete." It made no comment on market rumors that it is in exclusive talks with Nasdaq Stock Market Inc. about a deal.

Reuters shares fell 0.7% to 406.00 pence ($7.79) on the London Stock Exchange.


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