Thomson Reuters Falls as Severance Charge Leads to Loss

Thomson Reuters Corp. (TRI), a provider of news and information services, fell after reporting a net loss including severance charges.

The shares dropped less than 1 percent to $33.49 at the close in New York after earlier sliding as much as 3.1 percent.

Thomson Reuters is relying on its smaller divisions for growth as demand for financial-data products such as Eikon stalls, with Wall Street customers still recovering from the 2009 recession. Tax and accounting revenue gained 6 percent to $317 million, while legal sales rose 3 percent to $794 million, the New York-based company said today in a statement.

Excluding acquisitions and discontinued businesses, total sales contracted 1 percent in the quarter. In the financial and risk division, which includes the data products, revenue fell 2 percent to $1.68 billion.

Investors appear to be taking back some of the gains in the stock, which rose to a 20-month high yesterday, according to Tim Casey, an analyst with BMO Capital Markets in Toronto.

“There’s a bit of profit-taking in the run-up in the quarter,” he said in an interview after the earnings report. “The first quarter is seasonably the smallest quarter for the company.”

The soft economy has prompted Chief Executive Officer Jim Smith to rely on cost-cutting to improve profitability. He announced in February the company would eliminate 2,500 jobs, or about 4 percent of its workforce, with the firings coming from the financial and risk division.

Severance Costs

The company recorded severance costs of $78 million, or 8 cents a share. With that charge, Thomson Reuters reported a net loss of $31 million, or 4 cents a share, compared to net income of $294 million, or 35 cents, a year earlier.

Sales from ongoing businesses reached $3.1 billion. Analysts estimated $3.15 billion on average.

Excluding some items, profit of 38 cents a share beat analysts’ expectations of 32 cents on average, according to data compiled by Bloomberg.

The company reiterated its 2013 forecast for revenue growth rate in the low single digits and a profit margin of 26 percent to 27 percent, adjusted for interest, tax, depreciation and amortization.

Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing financial news and information.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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