Reuters sees revenue fall 7.7%

Reuters Group Plc, the world’s largest publicly traded provider of financial information, said third-quarter revenue fell 7.7% as banks cut spending.

Revenue declined to £789 million (€1.14 billion) from £855m in the year-earlier period, Reuters said in a statement. Revenue from its largest unit will drop by as much as 11% for the full year.

“There has been marked slowdown in the overall rate of cancellations,’ Chief Executive Officer Tom Glocer said. “There are signs of improvement in the US driven by lower level cancellations and meaningful new sales, but there isn’t any meaningful improvement in Europe.”

Reuters, based in London, is cutting 19% of its workforce, reducing the number of products and boosting its research offerings to save money and revive sales. Revenue has declined for three years as banks cut more than 100,000 jobs and cancelled subscriptions for Reuters terminals.

Shares of Reuters rose as much as 10.5 pence, or 4.5%, to 245p (354c), their biggest percentage increase in three months.

Revenue from subscriptions at the unit that sells information and news to brokers and banks, Reuters’ largest, fell 10.9% in the third quarter. Revenue on that basis, which Reuters calls underlying recurring revenue, was expected to decline 11.3%, according to a survey of analysts. That excludes the effect of exchange rates.

The third quarter had the lowest level of net cancellations since the first quarter of 2002, Reuters said.

Many of Reuters’ customers reported rising profits in the third quarter, fuelled by bond sales and rising global equity indexes.

Wall Street firms are headed toward their most profitable year as stocks climb. Securities firms’ profits will total a record $22.5bn, according to a survey this month by Securities Industry Association.

As part of a three-year cost-cutting program announced in February and aimed at saving £440m annually by 2006, Reuters has cut 1,000 jobs this year.

Reuters also said it plans to cut the number of its products to 50 by 2006 from more than a thousand last year.

Other measures include moving its global software development centres to four locations from 13 and the transfer of more than 70 employees to Accenture Ltd. as Reuters exits the computer-services market.