Big vendors - turning the corner?
Jinfo Blog

By Tim Buckley Owen

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“Cautious optimism” may be a bit too upbeat to describe the latest clutch of results from Reed Elsevier, Thomson Reuters and Dow Jones.  But there does at least seem to be a consensus that some kind of corner has been turned.

Dow Jones’s results are subsumed into those of News Corporation – but in a letter to employees (widely reported – see for example the Poynter journalism school’s coverage), Wall Street Journal publisher Les Hinton talks about “encouraging numbers” from the company in the quarter ended 31 December.  Total revenue rose 7%, he said, with advertising revenue for the WSJ up 10%, the fifth consecutive quarterly increase.

Commenting that Dow Jones’s enterprise businesses appeared to have “turned a corner” in the quarter, Hinton promised continuing investment in content and technology, singling out Factiva in the process.  However, his letter didn’t quote any profit figures.

Reporting both full year and fourth quarter 2010 results, Thomson Reuters’ figures show a 4% increase in revenues from ongoing businesses and a 1% increase in underlying operating profit in the quarter.  Over the full year, though, underlying operating profit dropped by 7%, with investments in new product launches, acquisitions and the impact of currency cited as the reason.

Certainly plenty of new products were launched, including WestlawNext, Eikon and Elektron – but the 8% decline in operating profits from legal services over the year (5% in the fourth quarter) arguably tells the bigger story.  Lower revenues from high-margin print and non-subscription products were among the reasons Thomson Reuters gave – plus the impact of acquisitions and investments in strategic growth initiatives, which more than offset savings from efficiency initiatives.

Among Reed Elsevier’s year-end results, 1% revenue growth for LexisNexis was accompanied by a 12% decline in operating profit, while the troubled Reed Business Information saw a 20% decline in revenue with operating profit flat.  Meanwhile LexisNexis has now completed the separation of LexisNexis Risk Solutions and Legal & Professional, to “sharpen the management focus on their respective markets”.

No more than gradual revenue recovery is expected for LexisNexis Legal & Professional this year, with the adjusted operating margin broadly flat.  “While law firms, corporations and governments remain cautious in their spending, new sales are higher and the environment is more stable,” the report says.

Any bright spots for the big vendors?  One, possibly: the continuing opportunities presented by software-based workflow solutions.

LexisNexis Risk Solutions captured the benefit of increased market activity and growing demand for data and analytics, says Reed Elsevier – while Thomson Reuters speaks of growth in its Workflow & Service Solutions, led by income tax software products and its global tax technology business.  A worry for infopros?  Or a new vendor portfolio management opportunity?

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