News and information provider Thomson Reuters Corp's revenue growth ticked up in the first quarter as it reaped the benefits of heavy spending on new products, and the company said it plans to sell two more businesses to fund further investment.
Thomson Reuters said on Thursday it expects to raise about $1 billion from the sale of its enterprise risk management and investment accounting software businesses, along with previously announced sales of its BARBRI legal education product and Scandinavian legal and tax and accounting units.
Chief Executive Thomas Glocer said the proceeds would be reinvested in the core business. First-quarter revenue from ongoing businesses was $3.2 billion, up 5 percent before currency adjustments, quickening from 4 percent growth in the preceding quarter. "Our businesses are heating up," Glocer said after reaffirming the company's forecast for mid-single digit revenue growth in 2011.
Excluding a one-time charge, adjusted earnings per share amounted to 42 cents, missing the average analyst forecast of 43 cents, according to Thomson Reuters I/B/E/S. Thomson Reuters' US shares, which have risen 14 percent in the past year, were down 3.6 percent in early trading in New York. They were down 3.3 percent in Toronto.
First-quarter underlying profit increased 1 percent, with a corresponding margin of 17.2 percent. Excluding the $39 million one-time charge, the underlying profit margin was 18.4 percent compared with 18 percent in the same period of 2010. Thomson Reuters, which provides news and information to financial, legal, accounting and healthcare professionals, also reiterated that it expects its operating profit margin to increase by at least 100 basis points this year.
"The good news is clearly the underlying markets are finally starting to grow," said Claudio Aspesi, an analyst at Sanford Bernstein & Co in London. Still, he said, with the return to revenue growth he would have liked more improvement in margins. "We are still not seeing that," he said.
Professional division revenue increased 8 percent to $1.38 billion, driven by a 10 percent increase in legal revenue. The WestlawNext legal database has been sold to more than 18,500 customers since its launch in February 2010, representing 34 percent of Westlaw's revenue base, the company said.
Glocer said legal markets were improving slowly. "Firms are doing fine now but they won't forget too quickly how scared basically they were two years ago," he said in an interview. In the Markets division, which competes with Bloomberg LP and News Corp's Dow Jones unit, revenue rose 2 percent to $1.87 billion. Like Bloomberg, Thomson Reuters gets much of its revenue from long-term subscriptions for its desktop products.
Thomson Reuters has invested heavily in new products such as its financial desktop Eikon, high speed data feed platform Elektron and WestlawNext. The company said it has sold or migrated more than 19,000 Eikon desktops since the product's launch in September 2010.
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