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Reuters unveils Web plans
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February 8, 2000: 7:50 a.m. ET
Information provider may offer two units; operating earnings little changed
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LONDON (CNNfn) - Reuters on Tuesday announced 1999 earnings little changed from a year earlier, and outlined its strategy to focus much more closely on Internet-related activities -- including the possible offering of two units.
The company's shares were 14 percent higher in London at 1.142 pence in Tuesday afternoon trading.
Operating profit was flat at 549 million pounds ($877 million), and earnings per share for the year rose 13 percent to 30.2 pence. Revenue rose 3 percent to 3.13 billion pounds.
Investors were more interested in the financial information provider's plans to harness the Internet, which is seen to offer both significant risks and opportunities to Reuters' traditional business.
The London-based firm is pressing ahead with an initial public offering of stock in its Greenhouse fund, an Internet incubator fund, and is mulling an IPO for Instinet, a U.S.-based electronic communications network.
Investors have driven Reuters' stock price up by around 40 percent in recent months as the company's potential to exploit the Internet has come into focus.
Reuters said it would invest 500 million pounds in developing its Internet presence over the next four years, to "open new markets and migrate its core business to an Internet-based model."
Profits "significantly lower"
The company warned however that profits in the year ahead are likely to be "significantly lower" because it will take a 300 million pound charge -- half of that this year -- to reorganize its activities. This one-time hit will result in annual cost savings of 150 million pounds beginning in 2002.
New initiatives based around the Internet include a venture with the U.S. firm Multex to develop a Web site for community of private investors in Europe, to build a new financial portal for the consumer finance market, and a deal with Aether Systems to create a wireless business in Europe.
The results for 1999 were broadly in line with market expectations, and the company confirmed that its trading systems division had been hit by a freeze on spending by some customers, as well as low volume and further consolidation in the currency exchange markets.
The Greenhouse fund chipped in capital gains of 50 million pounds, and Reuters confirmed the fund has increased in value to 438 million pounds at the end of December from 68 million pounds at the end of July, thanks to several recent IPOs. The fund currently has 38 investments -- of which 12 have a separate listing. Advisers have been appointed for the fund's own IPO. 
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Reuters
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