Downgrade sends Reuters crashing
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Reuters shares crashed to a nine-year low yesterday as Morgan Stanley, the broker, downgraded the stock amid concern about a sharp decline in revenues in the second half of this year.
The news and financial information supplier may be cutting costs dramatically but the fear in the market is the company cannot downsize fast enough to keep pace with demand that is disappearing even faster. Reuters reports interim results on 23 July, which are expected to be hit by a £100m restructuring charge.
"Unfortunately they are doing this [restructuring] at a time when Reuters' key customer group [investment banking] has already suffered a 50 per cent fall in earnings," Morgan Stanley said, noting this has intensified competition with its main rival Bloomberg.
Investment banking on Wall Street, the City of London and Europe will continue to see headcount reduction through the remainder of this year, the broker said, "which could see an impact on Reuters recurring revenues out into 2004".
The lower the headcount, the fewer Reuters terminals these customers need – and it takes about six months to cancel a subscription.
In a gloomy assessment of Reuters' prospects, Morgan Stanley analysts said the second quarter of this year "will show material deterioration in revenues" compared with the first quarter "and the second half will be much worse".
Reuters shares closed down 16p to 317p on turnover of 10.55 million shares as Morgan Stanley cut its recommendation on the shares from "equal-weight" to "under-weight".
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
0Comments