December 2, 2011

The Wall Street Journal

Thomson Reuters Replaces Its CEO-UPDATE

Thomson Reuters Corp., which has been losing ground in its key business of financial data, is replacing Thomas Glocer as chief executive.

Thomson Reuters named-chief operating officer James Smith to succeed Mr. Glocer, only weeks after Mr. Smith became COO.  Until late September Mr. Smith had been chief executive of the Professional division.

The shake-up, effective Jan. 1, suggests that the controlling Thomson family has lost patience with Mr. Glocer's management, particularly his efforts to turn around its Markets division, which sells packages of financial data, news and analytical tools to financial professionals.  The division generates more than half of the company's revenue but it had been underperforming, boosting revenue just 1% in the September quarter.  In contrast, the Professional division, which oversees the company's legal, tax and accounting and health-care information businesses, increased revenue 10%.

Thomson Reuters's share of the $24 billion global financial-data market has been falling.  It is expected to finish 2011 with 31.4% of the market, down from 37.4% in 2005, projects market-data research and consulting firm Burton-Taylor International Consulting LLC.  In contrast, Bloomberg LP has increased its share of the market and is projected to finish this year with 30.8% of the market, up from 25.1% in 2005, estimates Burton-Taylor.

But cultural differences between the former Thomson and Reuters businesses, which combined when Thomson acquired Reuters in 2008, could also have played a role, according to one person familiar with the situation.  Mr. Glocer came from the Reuters side, having been CEO of that company since 2001.  But the Thomson family, which controlled Thomson Corp. before the deal, ended up with control and has been pushing for people from their side of the deal to play a larger role in the company. Mr. Smith previously served as chief operating officer of Thomson Corp.

A spokesman said the company doesn't comment on the family or its views.

The Markets division has suffered from the weak performance of a new product, Eikon, that it had been hoping would spur growth.  In response to the weak performance, Thomson reorganized the Markets unit in July, under pressure from the Thomson family.  Six executives, including the division's chief executive officer, departed in the shake-up, leaving Mr. Glocer with direct supervision of the unit.

At the time, Mr. Glocer said he was confident that the changes would improve its performance.  Earlier this month, Mr. Glocer said Eikon, which was supposed to begin paying dividends this year, likely won't see an uptick in sales until next year and won't drive revenue growth until 2013.

Thomson Reuters's stock is down about 28% since the start of the year.

On Thursday, Mr. Glocer sent a memo to colleagues saying that he recommended to the board that "Jim succeed me as CEO."

A spokesman for Thomson Reuters said neither Mr. Glocer nor Mr. Smith were available for comment.

In a statement, Thomson Reuters Chairman David Thomson said Mr. Glocer would be remembered for leading Reuters to growth and guiding its sale in the merger with Thomson Reuters.

"Over the past four years, Tom successfully directed an extensive integration, expanded our business internationally, revitalized the Reuters news organization and championed talent across the entire business," Mr. Thomson said.

Growth in the financial-data market has been slowing.  It is expected to increase only between 2.5% and 3.5% this year, according to Burton-Taylor, down from 4.2% growth last year.  Industry executives have also predicted that next year would be tough, with the European financial crisis and weak growth causing finance firms to downsize.  The financial data market fluctuates with employment in the finance industry.

Competitors to Bloomberg and Thomson Reuters include News Corp.'s Dow Jones & Co. as well as companies such as FactSet Research Systems Inc.  Dow Jones had 1.6% of the market last year, down from 2.25% in 2005. News Corp. owns The Wall Street Journal.
by Russell Adams and Martin Peers, Emily Steel contributed to this article