* Q4 EPS ex-items 59 cents vs Wall Street view of 56 cents
* $3 bln noncash charge for goodwill impairment
* $50 mln charge for Markets restructuring
* Sees 2012 revenue growth in low single digits
By Jennifer Saba
NEW YORK, Feb 9 Thomson Reuters Corp
reported a fourth-quarter loss on Thursday
after taking a $3 billion non-cash goodwill impairment charge to
account for the decline in its financial services business.
The company gave no details about the charge, which helped
push its fourth-quarter results into a loss attributable to
common shareholders of $2.57 billion, compared with a profit of
$224 million in the year-ago quarter. This was its first
earnings report since James Smith took over as chief executive
Thomson Reuters' business has suffered in the wake of the
financial crisis, with customers in banking and finance laying
off tens of thousands of employees and slashing costs. The
global news and information provider's next generation flagship
desktop product, Eikon, has also posted disappointing sales.
The size of the one-time charge is an indication of the
extent of the problems in the financial services business -
formerly known as Markets - in the past year, which is reflected
in a 30 percent decline in its stock price. It also represents
quick recognition of the problems by a largely new management
team as it begins its repair effort in financial services.
Growth has been much stronger in the businesses that cater
to legal, tax and accounting firms, formerly known as the
Professional division. Professional revenue grew 9 percent in
the fourth quarter before currency changes to $1.5 billion,
accounting for 42 percent of total revenue.
Markets, whose products compete with Bloomberg, Factset
Research and News Corp's Dow Jones, posted 2
percent revenue growth before currency changes to $1.85 billion.
As of January, the company merged the two businesses and set
up a new organizational structure that includes Legal, Tax &
Accounting, Intellectual Property & Science, and Financial &
"The units in the former Professional division continued to
perform well and we made significant strides in kick-starting
the growth engine in our former Markets division," Smith, who
used to run Professional, said in a statement. "We have
simplified our organization; we have strengthened our management
team; and we are making progress toward improving our execution
Thomson Reuters underwent a series of structural changes and
management shakeups in 2011 to address lackluster performance in
Markets and a slumping stock price. This resulted in the exit of
then chief executive Tom Glocer, who had helped engineer the
acquisition of Reuters Group Plc by Canada's Thomson Corp in
The company reported a $50 million charge in the fourth
quarter related to the reorganization of the former Markets
business. It said that included severance costs at the corporate
level as well as Markets. It did not give the total number of
Adjusted earnings per share, which excludes the goodwill
charge, rose to 54 cents from 37 cents a year ago. After also
backing out restructuring charges, earnings per share were 59
cents compared with analysts' average forecast of 56 cents,
according to Thomson Reuters I/B/E/S which compiles brokerage
Thomson Reuters said it expects 2012 revenue to grow in the
low single digits. Before the results came out, analysts were
forecasting 2012 revenue growth of about 2 percent to $13.09
Revenue from ongoing businesses rose 5 percent before
currency changes to $3.4 billion in the fourth quarter, compared
with analysts' average forecast of $3.3 billion.
The company said Eikon desktops now has 15,000 active users,
up from 8,000 on September 30, 2011.
For the fourth quarter, underlying profit margin was 19.6
percent compared with 19.1 for the same period last year. The
company expects its 2012 underlying profit margin to be in the
range of 18 percent to 19 percent, citing higher depreciation
and amortization expenses related to new products.
Thomson Corp acquired control of Reuters Group Plc in 2008
for about $17.2 billion, a 40 percent premium to Reuters share
price at the time. The $3 billion goodwill
write-off represents 17 percent of the purchase price.
Volatility in the media business has resulted in other major
write-offs in recent years following the acquisition of
signature properties. Rupert Murdoch's News Corp paid $5.6
billion for Dow Jones, publisher of the Wall Street Journal, in
2007, and the following year took a $2.8 billion non-cash charge
on the purchase.
As of the end of 2011, Thomson Reuters valued its goodwill
at $15.9 billion, down from $18.9 billion at the end of 2010.
Thomson Reuters also said on Thursday it intended
to sell three businesses: Tax & Accounting's Property Tax
Services; Legal's Law School Publishing business; and Financial
& Risk's eXimius business, which is part of the Retail Wealth
Management organization. The three businesses combined had about
$155 million of revenue in 2011.