May 10, 2009

New York Post

Get Me Rewrite

Wall Street 2.0 Tests Bloomberg

Bloomberg LP, which for two decades combined a booming Wall Street economy, weak competition and a quality product to create an ever-growing, money-making machine, is experiencing one of its toughest stretches ever.

The closely held financial information company, buffeted by the Great Recession, which is shrinking the financial services sector, recently had to hand out its first significant round of pink slips, mainly in its money-losing TV and radio operations, and has seen its bread-and-butter business -- the leasing of its ubiquitous terminals -- fall by 2.8 percent since November.

The company, started by Mayor Mike Bloomberg in 1983 and the source of his great wealth, is also facing a reinvigorated rival, Thomson Reuters, that it providing its first real taste of competition.

The challenges have Bloomberg dialing up a host of responses to keep its customers paying the $1,700 per terminal monthly average price.

One of the new services, The Post has learned, is a stock-research platform.

Bloomberg is hiring a handful of analysts whose job it will be to sift through data, provide revved-up equity research to assist equity analysts, traders and portfolio managers.

It is a new area Bloomberg had not waded into before.

"The market is in flux," said one Bloomberg insider. "Bloomberg is and will be a powerful source of information. I think [adding equity analysts] will be an important evolutionary step in Bloomberg."

Mayor Bloomberg, who owns 92 percent of the company and, according to Forbes, is worth about $16 billion, making him the wealthiest New Yorker, has stepped away from any management role in the company. But his fortune is closely tied to how well the company navigates this financial downturn.

Some on Wall Street feared Bloomberg's move into equity research would put it in competition with its customers. But one insider told The Post that Bloomberg doesn't plan to issue opinions on companies that would put it in direct competition with big banks or smaller, independent shops that sell research to clients.

But such moves aren't beyond the realm of possibility as it seeks new revenue streams, analysts said.

Bloomberg is trying to stem the drop in terminal leases, which have fallen to about 280,000. While that drop represents only 2.8 percent now, contracts for the terminals last a couple of years, which means it could be a while before the company feels the full brunt of Wall Street's pain.

In addition to expanding into new product areas, Bloomberg's battle plans also call for the hiring 1,000 workers this year.

The company is also close to naming the first chief marketing officer in its history.

The company is embarking on this expansion without its namesake founder, who is running for a third term as mayor and has announced he has no intention of returning to the company.

Bloomberg and Thomson Reuters, which account for more than half the market in the Americas, derive a huge chunk of their revenue from terminals that feed a non-stop stream of news and information to customers -- mostly in finance but also in areas such as government and law.

The Bloomberg terminal has actually morphed into a subscription service that is available not only on desktop terminals, but also on PCs and mobile devices.

Bloomberg offers one price point and has refused to budge despite the financial meltdown.

By comparison, Thompson Reuters offers a range of pricing. Its top-of-the-line terminals range from $1,600 to $2,000, but it also offers subscriptions with minimal information for under $100.

"Right now, they're under great pressure to keep those machines on desktops when their client base is trying to cut costs or their competitors are," said Douglas B Taylor of Burton-Taylor International Consulting, which tracks sales of financial data terminals.”
by Holly Sander Ware