Earnings: Reuters Q3 Revs Up 7.6 Percent, Expects Thomson Clearance Early '08

Reuters (NSDQ: RTRSY) saw underlying growth rise 7.6 percent to £646 million in the three months to September 30 and now expects EU and US regulatory clearance for its Thomson (NYSE: TOC) merger early in 2008. The company reported “good progress with strategic, technical and organisational blueprints” for the £8.7 billion pairing, which Reuters’ founders shareholders group approved in May.

Driving the growth were high levels of data consumption and take-ups of its 3000 Xtra financial information service. Consumer services revenue was up 29 percent underlying to £8 million and included the first advertising revenue from Reuters direct-to-consumer websites in China and India. Thanks to the weak dollar, overall revenue actually grew just 2.3 percent, but the company said it was weathering the credit crunch storm.

In the conference call, CEO Tom Glocer (via Reuters): “If it doesn’t spill over into a recession we are going to be fine.” From the release: “This is a good set of numbers that shows our performance has not been impacted by the turbulence in the credit markets, nor any distraction from the Thomson deal.”

He reiterated he would not need to dispose of assets to win Thomson-Reuters regulatory approval. On the settlement of the merger proposal, analysts forecast close U.S. and EC regulatory scrutiny. The companies put their case to European regulators early in September but the EC began a deeper, phase-two investigation this month – due for completion February 25 – after finding initial concerns that the merger would cut the number of major companies selling info and trading systems to the financial services industry from three to just two. (Reuters Financials & Release).

Thomson: In its own results today, the Canadian merger partner saw a big Q3 income spike, from $419 million (£204.3 million) in the 2006 period to $2.97 billion (£1.45 billion) this time, thanks to the $7.75 billion (£3.78 billion) sale of its education publishing business. But it clocked up $29 million ($19 million) in transaction costs. In the conference call, CEO Richard Harrington (via Reuters) said the merger “will enhance competition as well as customer value”: “The commission’s move was not a surprise, given the deal’s size and complexity. We are comfortable with the process and have always planned for the possibility of a phase II review.” (Thomson release).