Thomson Reuters has shaky start as stock sheds 10%

DOUGLAS HAMILTON

Published on 18 Apr 2008

Shares in Thomson Reuters, the newly-merged news and business information company, got off to a bad start on equity markets yesterday, shedding more than 10% of their value in UK trading as investors fretted over huge losses incurred by the financial services industry.

The stock was also hit by a "sell" note from analysts at ABN Amro, the Dutch-based investment bank recently taken over by a partnership led by Royal Bank of Scotland.

ABN said it based its recommendation on the premise that the financial industry is bracing for big job cuts and takeovers.

"This is not a helpful backdrop for the market-data industry, which accounts for 60% of Thomson Reuters' proforma revenue and is a fixed-cost business," ABN's media industry team said.

Thomson Reuters was formed after Canadian-based Thomson bought Reuters for more than $16bn (£8.1bn) in cash and stock.

The new company hopes its portfolio of products, ranging from financial to legal and healthcare, will help it ride out the global financial storm that was created by the US sub-prime mortgage debacle and subsequent credit squeeze. The combination allows Thomson to expand its financial data offering from its North American base, blending the Reuters trading business with Thomson's money manager activities.

It has also meant to help Reuters cut its exposure to financial markets, recently buffeted by credit crises.

Thomson Reuters, headed by former Reuters chief Tom Glocer, sells electronic news and data to traders, fund managers and analysts, as well as databases and other information to lawyers, accountants, scientists and the healthcare industry.

The London-listed shares closed 160.375p, or 10%, lower at 1560p and fell by around 4% in Toronto and New York.

The company announced it may buy back up to $500m of its stock during the year.