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Thomson Reuters Corp. (TRI-T) named Jim Smith as chief operating officer and said it would merge its two main divisions, Markets and Professional, as it streamlines to better compete in tough financial markets.
The news and information company has undergone a series of shakeups this year as revenue growth slowed in the Markets division and it struggled to persuade traders and bankers to adopt Eikon, its new flagship desktop.
Chief Executive Tom Glocer said the revamp, which puts Smith in a strong position to eventually take over as CEO, was meant to "capture operating efficiencies from scale."
There may be some management layoffs as a result, he said, although he declined to give a number.
Smith, whose appointment is effective immediately, was previously the CEO of the Professional division, which sells legal, tax and accounting products such as WestlawNext.
Glocer said that having two big standalone organizations within Thomson Reuters had been an impediment to running the company, which was created in 2008 when Thomson Corp. bought Reuters Holdings Plc.
"We've organized the firm the right way (now)," he said.
Thomson Reuters' second quarter results released in July highlighted the tepid growth in the Markets division that resulted in the departure of six senior executives, including division chief Devin Wenig.
Glocer has taken direct responsibility for the turnaround of Markets and has about a year to make it work, people familiar with the thinking of the board and the controlling shareholder, Canada's Thomson family, said in July.
Claudio Aspesi, an analyst at Sanford Bernstein in London, questioned why the company did not implement the changes in the summer when it reorganized the Markets division.
"It could have been implemented then," he said. "Has anything changed in the view of senior management and the board?"
REVENUE GOALS IN QUESTION
The Markets division, which accounts for 59 percent of overall revenue, reported 1 percent growth in revenue after backing out the impact of exchange rate movements. The Professional unit reported 8 percent growth. Overall revenue rose 4 percent to $3.2 billion US.
Analysts have said that Thomson Reuters might not meet its revenue goals over the next few years if it cannot convince existing clients to migrate to Eikon and win new customers away from competitors such as Bloomberg LP, News Corp's Dow Jones and FactSet Research.
Glocer said Eikon sales and migrations were "good" in September.
"We are coming out in October with a fairly major release that is very focused on the quality of the software," he said in an interview.
"We are really focused on the remainder of the year on performance and product quality with a view we will enter the year with a significantly improved and stable product."
Thomson Reuters also announced Wednesday that Chief Financial Officer Bob Daleo planned to retire next July after he turns 63. He will be replaced in January by Stephane Bello, who is now CFO of the Professional division.
The company said it would maintain the current financial reporting structure for the rest of the year as it transitions to a set of focused business units.