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Thomson Reuters (TRI)

Q2 2011 Earnings Call

July 28, 2011 8:30 am ET


Frank Golden - Senior Vice President of Investor Relations

Thomas Glocer - Chief Executive Officer and Director

Robert Daleo - Chief Financial Officer and Executive Vice President


Claudio Aspesi - Sanford C. Bernstein & Co., Inc.

Paul Steep - Scotia Capital Inc.

Sara Gubins - BofA Merrill Lynch

Phillip Huang - UBS Investment Bank

Colin Tennant - Nomura Securities Co. Ltd.

Suzanne Stein - Morgan Stanley

Thomas Singlehurst - Citigroup Inc

Tim Casey - BMO Capital Markets Canada

Vince Valentini - TD Newcrest Capital Inc.

Brian Karimzad - Goldman Sachs Group Inc.

Drew McReynolds - RBC Capital Markets, LLC



Ladies and gentlemen, thank you for standing by, and welcome to the Thomson Reuters Second Quarter 2011 Earnings Call. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Senior Vice President, Investor Relations, Mr. Frank Golden. Please go ahead.

Frank Golden

Good morning, and thank you for joining us, as we report our second quarter 2011 results. We'll begin today with our CEO, Tom Glocer, who will be followed by our CFO, Bob Daleo. Following Tom's and Bob's presentations, we'll open the call for questions. Please limit yourself to one question, so we can get to as many as possible.

Throughout today's presentation, keep in mind that when we compare performance period on period, we look at revenue growth rates before currency, as we believe this provides the best basis to measure the underlying performance of the business. Let me point out that the second quarter results are for ongoing businesses, and therefore, exclude the Healthcare business, which we announced on June 6 that we plan to divest.

Earlier this month, we posted on our website the restated financials for ongoing businesses for 2008, 2009, 2010 quarterly and the first quarter of 2011. Today's results should be measured against these financials. The planned divestiture of the Healthcare business and several other small disposals had a $0.02 dilutive impact on adjusted EPS in the quarter.

Today's presentation contains forward-looking statements, actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You can access these documents on our website or by contacting our Investor Relations department.

It's now my pleasure to introduce the CEO of Thomson Reuters, Tom Glocer.

Thomas Glocer

Thank you, Frank, and thank you, all, for joining us. Typically, when I speak to you each quarter, I begin with the review of in-period performance, using a slide like this. Today, I want to do things a little bit differently. The numbers themselves are pretty good, but they don't tell the whole story, so rather than just summarizing our results, I'll leave that to Bob Daleo, and I'll focus instead on the Markets division reorganization that we announced last week.

So last Friday, I announced a set of organizational changes intended to close the chapter on the Reuters integration and best position us for growth in our financial services businesses. These changes will simplify the business, enhance sales effectiveness and allow us to call on the resources and talents of the entire company to serve our customers.

To move with the urgency I felt was needed, I also changed our various members of the senior management team, including Devin Wenig. Our financial business will now be comprised of 2 operating units, Financial Professionals & Marketplaces and Enterprise Solutions, reflecting our 2-platform strategy, Eikon and Elektron, respectively.

Financial Professionals & Marketplaces will focus on services for professionals delivered to screens, combining the former Sales & Trading and Investment & Advisory units and includes our trading marketplaces, the FX Dealing ones and Tradeweb. This unit will be led by Shanker Ramamurthy, who joined the company earlier this year and has been running Sales & Trading.

Enterprise Solutions will focus on services and infrastructure for financial firms as a whole, continuing and expanding the current Enterprise unit and will continue to be managed by John Robson. This structure will enable us to focus on our core strengths of content, infrastructure, trading communities, distribution and joined-up workflow solutions. Eikon remains our flagship desktop offering, but it will be sold as part of an integrated strategy.

These changes not only simplify the Markets organization, but also reflect how the financial markets are evolving and reconfiguring themselves, becoming really a partnership of man and machine, serving customers with the greatest capital efficiency possible. This is something we need to stay out in front of and drive.

So why did we restructure the Markets division? It's no secret that I've been disappointed with the slow growth in Markets. I realized that the growth trajectory was not as strong as it needed to be, nor was the customer experience universally as favorable as it should be. Much of the underperformance resulted from a poorly executed sales reorganization in Markets at the end of last year. We've now changed the leadership in Sales, and a detailed fix is already underway.

In addition, I felt that we were not leveraging the strength of the entire financial business in the development and marketing of Eikon. Again, there is new leadership in place and a robust development plan. Much of this work was actually already underway, but when I saw the results were going to be slower, we swung more quickly into action.

I am disappointed in the overall performance of the Markets division, but these week results, overall, masks some underlying positive trends built on our core strengths.

So for example, our Enterprise business, which is now over $1.2 billion in annual revenues, grew 10% in Q2 and is an increasingly important part of the Thomson Reuters market story. Our trading marketplaces business also grew 10% and our Commodities & Energy and Asia businesses grew 5% each.

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