Reuters plans a belated Web push
The strategic direction, which analysts had been preparing for, was unveiled as the group said its full-year pretax profit rose 9 percent to 632 million pounds. Revenue increased 4.2 percent to 3.16 billion pounds.
"The Internet has opened up two big opportunities for Reuters," said CEO Peter Job in a statement. "It has enabled us for the first time to start serving an infinitely wider market. It has also allowed us to adopt a more cost-effective model for our base business."
Reuters shares were trading 33 pence, or 3.3 percent, higher at 1040 pence after the news.
Investing in the Net
To underpin the group's Internet push, Job said the company would spend half a billion pounds over four years. It has also appointed advisors to prepare for an initial public offering of a portion of its Greenhouse Fund for Internet startups.
Reuters is also looking at various options for its Instinet electronic brokering business, including a possible share offering.
Also, following last week's news that Reuters is setting up a new company with Equant NV to offer a secure Internet protocol network for the financial services industry, it plans to form two further joint-venture companies.
Reuters and Multex.com Inc. will create an equally owned company, Multex Investor Europe, to offer a financial Internet portal for European private investors.
The new company will combine Multex.com's global research database with Reuters' information and news, delivering it to stockbrokers, investment banks and private investors. Multex.com already operates a similar U.S. portal, Multex Investor, which it launched in November 1998.
The new company will be chaired by Isaak Karaev, chairman and CEO of Multex.com. It will have another director from Multex and two from Reuters and will be based in London.
Wireless apps
Reuters also signed a letter of intent to set up an independently managed company with Aether Systems Inc. to provide wireless data applications in Europe.
The new firm, to be based in the UK, will design, develop and operate wireless services for clients. Revenue will come from service fees, transaction fees and design work.
Aether, which will own 60 percent of the venture, will contribute $100 million in cash and have three directors on the board. Aether Chairman and CEO David Oros will be chairman and acting CEO.
Reuters will hold the remaining 40 percent and will contribute about $22 million in cash. It will have two board members, and the company will also be the primary supplier of news and financial information to the venture.
Profits dip
Reuters' 1999 operating profit fell 1 million pounds to 549 million pounds despite an increase in revenue to 3.16 billion pounds from 3.03 billion pounds in 1998.
Earnings per share rose to 30.2 pence from 26.7 pence, just shy of the 30.47 pence a share that one analyst said was the consensus forecast among his peers.
The dividend for the year remains at 11 pence a share. Reuters said future dividends would be linked to profit from its Reuters Information and Reuters Trading Solutions businesses. Reuters Information is being expanded to include the group's global sales and operations unit, while Reuters Trading will take on responsibility for relationships with the group's global accounts.
Reuters said its financial arm will continue to make progress at constant exchange rates over the next two years, but after providing for restructuring costs its profit is bound to be significantly lower in 2000. Group profit will also reflect this, it added.