Reuters Has Broad Internet Strategy
NEW YORK (AP) _ Reuters Group PLC plans to spend $800 million over four years to reinvent itself as an Internet company that will deliver news and financial data to mom-and-pop investors and Wall Street pros alike.
The 150-year-old, London-based company hopes to capitalize on the boom in interest about financial data and markets, for the first time targeting amateur investors _ many of whom now view Reuters information for free on media and corporate Web sites that subscribe to Reuters. In doing so, it hopes to sharply expand its fee-collecting subscriber base.
Company officials said they would provide basic information free to Web visitors but would sell premium services.
Spokeswoman Nancy Bobrowitz said it was too early to say what the various content packages would look like and cost. The services would be provided in various languages and would include video and other features, depending on an investor’s level of interest.
Investors on both sides of the Atlantic cheered Tuesday’s long-awaited Internet strategy announcement, sending Reuters shares soaring by more than 20 percent in London and New York.
``I think it’s very good that they are getting aggressive,″ said Meg Geldens of Merrill Lynch in London. ``It’s quite a transformation.″
The Internet has changed Reuters from a news company to an e-commerce company that investors will increasingly rely upon to move money through world markets, said Peter Job, the chief executive.
``The Internet is changing dramatically the landscape of Reuters’ customer base,″ Job said during a teleconference with reporters and analysts.
By midyear, Reuters will create a new Internet site that will provide access to news, video, online trading services and market data, something that could make it a direct competitor to services such as America Online Inc.
Reuters also will offer its Instinet stock trading service to consumers over the Internet by mid-2000. Reuters said it may sell stock in Instinet, the oldest and most widely used electronic communications network, or ECN.
In addition, it announced a joint venture with Multex.com to provide information from investors, analysts and brokers to private investors in Europe. Reuters also will form a new company with Aether Systems Inc., to deliver financial data using wireless technology.
Last week, Reuters announced an agreement to form a global financial network company to deliver financial information to brokers, traders, banks, insurers and fund managers worldwide. Users who now make investment decisions based on Reuters information will be able to conduct those financial transactions through the company’s secure network.
The transformation of Reuters to a company providing financial information straight to consumers could put it in direct competition with the Internet access services that now carry Reuters reports.
Analysts who follow AOL, the world’s largest Internet service provider and home to the most-visited financial sections on the Web, said they are eager to see what Reuters does. But they add it’s too early to say whether the two companies would be competitors.
James Preissler of PaineWebber said AOL’s proposed merger with Time Warner would give it access to a wide variety of new content.
``Who knows,″ he said, ``part of this $800 million Reuters plans to spend could be delivering content through AOL.″
Investors were pleased with the announcement. The company’s share price shot up 23 percent in London and its U.S. shares were up $23.25, or by 23 percent, at $122.62 1/2 in afternoon trading on the Nasdaq Stock Market.
The Internet strategy was disclosed as Reuters announced annual earnings rose 9 percent.
Reuters said its pretax earnings rose to the equivalent of $1.02 billion from $935 million in 1998. Earnings per share of Reuters stock traded on U.S. markets rose to $2.91 from $2.58.
Operating profits fell to the equivalent of $883 million from $886 million. The company said growth was held back by concerns about possible Y2K problems and weak foreign exchange markets.
Reuters did not report quarterly earnings; under British law, publicly traded companies are not required to break their annual earnings down by quarters.