Reuters shares surge as revenue shows signs of recovery

LONDON (AFP) - Reuters shares surged by over nine percent as investors greeted news of a smaller-than-expected drop in quarterly core revenue at the British news and financial information giant.
The price of shares in Reuters soared by up to 9.44 percent to 353.5 pence here Tuesday.
By early afternoon, it stood at 351.75 pence, a rise of 8.90 percent and the biggest climber of FTSE 100 leading shares.
Reuters reported a 4.4-percent drop in subscription revenue, or underlying core recurring revenue, to 528 million pounds (759 million euros, 947 million dollars) during the third financial quarter from the same period a year ago.
Reuters had forecast its core revenue to fall by 5.0 percent during the third quarter.
In its trading update, the group gave a better-than-expected forecast for the fourth quarter, saying that the decline in subscription revenue was expected to be around 3.0 percent, against analysts' consensus for a drop of 4.0 percent.
In reaction, broker Citigroup Smith Barney retained its 'hold' recommendation. "We are more encouraged by the third quarter trading statement and expect the shares to react positively," it said in a note to clients.
"Reuters made good progress towards recovery this quarter," group chief executive Tom Glocer said in a statement.
"Despite uncertain market conditions, gross sales outpaced cancellations during the quarter for the first time since the first quarter in 2001."
Full-year core recurring revenue was expected to decline by close to 5.5 percent on an underlying basis, Reuters said.
Glocer said the group was operating in a "less favourable" market environment than at the beginning of the year.
"The US is uncertain ahead of the (presidential) election -- there's a lot less volume in the equity market, for example," Glocer told a conference call with reporters.
Reuters' core revenue, making up about 93 percent of total group revenue, comes from sales of screens to banks, brokerages and fund managers.
Reuters is recovering from a difficult past few years as banks, brokers and other financial firms have sought to cut costs and orders for the group's services.
Reuters' pre-tax profit rose to 332 million pounds in the six months to June compared with 19 million pounds during the same period in 2003, it announced in the summer.
Group operating profit climbed 61 percent to 98 million pounds but revenue fell 11 percent to 1.43 billion pounds.