Ahead of the release of its preliminary year-end statement last month, Reuters unveiled a range of initiatives designed to accelerate its use of Internet technologies, open new markets and migrate its core business to an Internet-based model. Reuters plans to spend £500 million over the next four years to migrate its services to Internet technology.
“The Internet has opened up two big opportunities for Reuters. It has enabled us for the first time to start serving an infinitely wider market, including individuals making financial decisions at home and at work. We estimate that more than 40 million individual users are now looking at our information on 900 Web sites. It has also allowed us to adopt a more cost-effective model for our base business,” says chief executive Peter Job, in a statement.
Prior to the results, Reuters announced a partnership arrangement with Equant (the world’s largest network of voice, data and Internet services) to form a new company that will offer what it claims will be the world’s largest Internet Protocol (IP) network to the financial services industry.
The company will combine Reuters financial services cache and content distribution with Equant’s solutions and experience in operating a secure, global IP network, say officials.
Through this venture, financial market participants will be able to gain access to information, conduct transactions and engage in e-commerce initiatives with their retail customers.
The company is targeted at financial units; asset, hedge fund and mutual fund managers; investment banks; brokers and dealers; commercial banks; commodities and futures trading firms; insurance companies; stock exchanges; and financial advisors.
“Using the new company’s offerings, financial institutions will be able to gain the IP security services needed to transmit securely financial transactions, such as equity trading and foreign exchange, over a global network, and implement a global supply chain for quick, secure transactions with customers, suppliers and vendors,” says a statement.
The new company plans to become operational by mid-2000, subject to regulatory and other approvals.
Additionally, Reuters and Aether Systems, a US-based wireless technology group, have announced plans to set up a new, independently managed company to develop and provide wireless data applications in Europe, initially focusing on financial markets. Ownership will be split 60/40 between Aether and Reuters, respectively.
With its preliminary earnings statement, Reuters reports revenues in the Reuters Trading Systems (RTS) group was hit by the introduction of the euro and continued consolidation in the finance industry, which depressed the FX transaction business.
For the year to 31 December 1999, Reuters reports £780 million in RTS revenues (excluding Reuters Voice Systems, which was sold in December 1998), down 4% at actual rates (and down 5% in comparable terms) in 1999.
Dealing accesses at the end of 1999 numbered 23,000, a decline of 5% compared with 1998 and dealing accesses at the end of 1998 fell 4% compared with 1997. Revenue from Dealing was £397 million at year-end, off 7% at actual rates and 9% at comparable rates from the year prior.