Reuters Lays-Off 650 Executives as Shares Plummet 13%

24 June 2002

Reuters, the international provider of on- and offline information services and financial data, saw its shares sink to a nine year nadir last Thursday, dropping £0.56 (13%) to £3.475. By close of trading Friday, however, they had recovered slightly (3%) to £3.585 – down from a peak of £16.20 in March 2000.

The latest plunge was influenced by a number of factors – not least the group’s announcement that it is to cut up to 650 senior and middle-management jobs. The latest job decimation – which brings total layoffs during the last twelve months to almost 10% of the group’s 18,000-strong workforce – will slash costs by a net £20m this year and £80m in 2003.

Analysts also read between the lines of Reuters statement that margins for 2003 would improve by “beyond 12 %” and, having themselves guessed 13%-14%, knee-jerked their profit forecasts downward by around ten per cent. Another catalyst in the share price plunge was Reuters’ admission that the latest round of redundancies may not be the last.

In the face of the share slide and increased competition from US financial data provider Bloomberg, pressure is now intensifying on Reuters chief executive Tom Glocer. While denying that revenues are declining, he conceded that the group sees no signs of recovery among its financial services clientele.

Reaction by the entrail-rakers to his frankness forced Glocer – just eleven months in the ceo’s hotseat – onto the defensive: “This is a case of Reuters making itself into an ugly ducking again,” he said, “coming out early to say there are people who say they see a recovery – but we don't. In 2003 there may be some recovery, but there is no sign of it yet.”

Data sourced from: Financial Times; additional content by WARC staff