* Q3 adj EPS 56 cents vs. Wall St estimate 53 cents
* Q3 rev up 5 pct, underlying profit up 10 pct ex-currency
* Markets division revenue up 1 pct from year earlier
* Professional division revenue up 10 pct
* Margin increases 80 basis points
* NY shares fall 2.2 pct, Toronto shares up 0.7 pct
By Jennifer Saba
Nov 1 Thomson Reuters Corp
posted improved third-quarter results, though CEO Tom Glocer
said a recent reorganization would take until 2013 to drive
revenue growth at the news and data provider.
The company reported stronger sales to legal, tax and
accounting professionals that helped overall results beat Wall
But growth remained subdued in the Markets division
catering to banks and other financial institutions, which have
been laying off tens of thousands and cutting costs.
Glocer also said sales of the company's flagship Eikon
desktop product had disappointed in some areas, such as
"We're not magicians," Glocer said in an interview on
Tuesday. "In a recurring subscription business like ours, if we
do a good job this fall ... it should turn into better sales
next year in Markets. And then that really doesn't roll through
(to revenue) until 2013."
Thomson Reuters, which affirmed its 2011 outlook, did not
provide forecasts for 2012.
The company's controlling shareholder, Canada's Thomson
family, has been concerned about the performance of the Markets
division, people familiar with the thinking of the board said
in July. Glocer has been given about a year to accomplish a
turnaround, the sources said at the time.
Glocer announced in September that Thomson Reuters would
merge its strongly performing Professional division, serving
mainly lawyers and accountants, with its Markets business.
As part of the shake-up, Jim Smith, the former head of the
Professional division, was elevated to the new role of chief
operating officer in September, putting him in a strong
position to succeed Glocer.
"We expect the benefit of these changes will improve sales
performance in 2012 and benefit 2013 revenue growth," Glocer
said in a statement accompanying the earnings release.
Thomson Reuters shares, which have fallen about 30 percent
from their highs this year, fell 2.2 percent in New York but
ended 0.7 percent higher in Toronto in overall weaker markets.
"What is clear at this point is that 2012 will not look
particularly good," said Claudio Aspesi, an analyst at Sanford
Bernstein & Co in London.
"Things are going to get worse before they get better...
even 2013 is a statement of optimistic faith in a recovery."
Thomson Reuters reaffirmed its outlook for 2011 as its
margins improved. Still, the Markets division, which accounts
for about 58 percent of overall revenue, posted revenue growth
of just 1 percent as banks continued to slash jobs and Europe's
debt crisis spooked markets.
Credit Suisse said on Tuesday it would eliminate
another 1,500 positions as it scales back its investment
"Conditions were challenging in some of our markets, but
that's not a good enough excuse as various competitors were
still able to grow their businesses," Glocer said in a memo to
staff. The company's competitors include Bloomberg LP, News
Corp's Dow Jones unit and Factset Research .
Thomson Reuters said it had sold 32,000 Eikon desktops as
of the end of September, including migrations, up from 28,000
at the end of June and 19,000 at the end of March.
Glocer said an "important" upgrade planned for year-end
would improve functionality and performance.
Thomson Reuters reported third-quarter revenue of $3.26
billion, up 5 percent before currency changes. Analysts had
expected $3.23 billion, according to Thomson Reuters I/B/E/S.
"I think the sentiment heading into the quarter was pretty
negative and these results were better than what people were
expecting," said an analyst at a major Canadian bank. "Some
investors thought the 2011 guidance would be cut."
"If things in Europe don't pan out (Thomson Reuters) will
be impacted for sure," the analyst added.
Revenue in the Professional division, which accounts for 42
percent of overall revenue, increased 10 percent after growing
8 percent in the second quarter. The 1 percent revenue growth
in the Markets division was unchanged from the second quarter.
The company said the Professional division, which competes
with Reed Elsevier's LexisNexis and products from
Wolters Kluwer , has sold WestlawNext to more than
29,000 customers since it was launched in February 2010 and now
represented 46 percent of Westlaw's revenue base.
Overall adjusted earnings per share rose to 56 cents from
45 cents in the same quarter last year. Analysts had expected
earnings of 53 cents per share.
Thomson Reuters said it still expected revenue to grow by a
mid-single-digit percentage rate in 2011.
The company's underlying operating margin improved to 22.0
percent, from 21.2 percent a year earlier.
Revenue in Europe, Middle East and Africa was flat in the
quarter. Revenue in Asia rose 2 percent while the Americas
increased 1 percent.
Thomson Reuters shares fell 2.2 percent to $29.02 in New
York. The Toronto-listed shares closed 0.7 percent higher at