Reuters shares soar on Net reorg plans

LONDON--Reuters Group, the giant financial information and news provider, said it will regroup its main businesses and move its services to a wider audience through the Internet.

The shares rose as much as 17 percent in their biggest one-day gain in at least a decade.

The reorganization, which will include a 300 million-pound ($479 million) charge over two years, will cause profit in Reuters' largest division to be "significantly lower" this year, the company said. The plans were revealed as the company reported a 10.6 percent rise in 1999 net income.

Investors have put pressure on Reuters to come up with a strategy to compete with Internet-based rivals such as TheStreet.com and to renew growth at its Instinet electronic trading unit, whose third-quarter sales in the United States saw no growth.

The company said today it will spend 500 million pounds ($800 million) over four years "in the migration of its services to Internet technology."

"They're committing a significant amount to the Internet over the next four years," said James Holder, an analyst at HSBC Securities who rates the shares "hold." "People will see (the plans) as them delivering."

Reuters plans to offer its Instinet trading service to individual investors over the Internet by mid-year, CEO Peter Job said during a conference call with analysts. At the same time, it will create a new Internet site that will give people access to Reuters news, research, graphs, video and trading services, he said.

Reuters shares rose 148 pence to 1,155p after trading as high as 1,161.25.

The company is also considering selling shares in Instinet and said it is appointing advisers to prepare an IPO of its Greenhouse Fund, which invests in Internet and technology companies.

Sales of the company's financial information terminals and trading systems were hurt last year as clients merged and delayed purchases until after the year 2000 date change. The company said today that the ''millennium effect'' is beginning to unwind, but will have an impact on installations of terminals in the first quarter.

Reuters said it will reorganize into three divisions. Reuters Financial will include Reuters Information and Reuters Trading Systems as well as the company's global sales and operations unit. Instinet will remain a separate division. The third division, Reuterspace, will include all of the company's operations in new areas, including the Greenhouse Fund.

The biggest division, Reuters Financial, will take a 300 million-pound reorganization charge over the next two years and will invest an additional 50 million pounds a year on developing its Internet technology, the company said. Those plans will help the company save an estimated 150 million pounds annually by 2002, it said "After providing for the restructuring costs in this business, its profits are bound to be significantly lower in 2000," the company said. "Group profits overall will reflect this as well as the impact of accelerated Group-wide investment programs."

Profit in 1999 rose to 425 million pounds ($681.8 million), or 30.2 pence a share, from 384 million pounds, or 26.7p a year earlier. The profit included a one-time 52 million-pound pretax gain from the company's initial public offering of its Tibco Software unit and 50 million pounds in gains from the disposal of fixed assets, mainly relating to the sale of Greenhouse Fund investments.

Overall, group sales rose to 3.16 billion pounds from 3.03 billion pounds.

Reuters Information's revenue rose 6 percent to 1.62 billion pounds, although the rise was 4 percent when adjusted for currency fluctuations. Trading Systems revenue fell 6 percent--or 8 percent when adjusted for currencies--to 780 million pounds.

Instinet's sales in the U.S. rose to 407 million pounds from 361 million pounds, up 12.7 percent or 10 percent when currencies were adjusted. Revenue outside the U.S. rose to 117 million pounds from 85 million pounds.

"Reuters is actively considering its strategic options for Instinet, one of which is an Initial Public Offering," the company said. "At the same time, Instinet is developing a number of new opportunities including products for the fixed income and retail markets, both of which will be launched in the near future."

Bloomberg LP, the parent of Bloomberg News, competes with Reuters in providing news, information and trading systems to the financial community.

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