Reuters hit by clients' problems

By DAILY MAIL REPORTER
Updated:

 

It was a sunny results day for Reuters - until chief executive Peter Job mentioned the Millennium Bug.

Only a 'straw in the wind,' he said, but some big customers are deferring taking new products.

Not what investors wanted to hear. Reuters had opened at 937p, up 21p, but it closed down 17p at 898 1/2p on the warning. The twitchiness is understandable with the shares at a lofty 30 times forecasts, buoyed by Internet euphoria.

Job went out of his way to damp this down as well. Reuters is proud of this month's $2bn float of Tibco, its US Net software offshoot.

Its Greenhouse Fund of hi-tech companies is also doing well, with £29m gains on disposals.

But these successes are icing on the cake. Job rejected the main idea of floating an offshoot bringing together all his Internet revenue streams. There will be no Reuters.com on Wall Street, at least for now.

This is a shame because it leaves Reuters with June half-year earnings rising just 2% to £300m pre-tax. The arrival of the euro has permanently dented currency trading.

Luckily, bonds and equities remained strong, and now contribute two thirds of revenues in the Information division. Instinet, the online equity brokerage, grew sales 23%. Job wants to link it with retail brokers.

Reuters' articles prevent anyone holding more than 20%, making a bid improbable. So at this rating the shares are only a hold, reckons Simon Baker of Teather & Greenwood. The dividend is 3.65p, up 7%.

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