Thomson Reuters Corp. (NYSE:TRI), the financial news and information company, plans to trim its workforce by 2,500 employees this year as demand for legal services remains weak and the company refocuses its efforts on legal research and software services.
The layoffs, comprising about 4 percent of the company’s 60,000-person global workforce, were announced by CEO James C. Smith at a conference call with analysts on Wednesday morning. Smith said the layoffs are “not easy decisions,” but added that they are necessary to cut costs at its Financial and Risk division. The division accounts for 54 percent of Thomson Reuters’ revenue.
Despite the pending staff cuts, Smith touted his turnaround efforts at the company and called 2012 a “watershed year,” saying it will be known as “the year we turned the tide.” He said the company has made progress in the legal information and intellectual property protection sectors, despite “an economic environment that proved to be even more challenging than we had anticipated.”
Thomson Reuters’ fourth-quarter earnings beat analysts’ estimates, with adjusted earnings of 60 cents a share, up from 54 cents from the same period last year. Full-year adjusted earnings per share were $2.12, up 16 cents from the prior year. However, revenue at the Financial and Risk division itself grew only by 1 percent.
Smith, who has been with Thompson Reuters for more than 25 years, took the reins in January 2012 with an eye toward revamping the company’s lackluster performance. During Wednesday’s conference call, he said that overhaul is about halfway complete and that the company is entering 2013 with more confidence. “We are in a different place,” he said. “The external environment continues to be challenging, but it feels more stable than a year ago.”
Smith formerly served as the head of the newspaper operations at Thomson U.S., and he has been instrumental in steering Thomson Reuters toward digital publishing. On Wednesday, he touted successes in that area as well, citing Thomson Reuters’ rapidly growing digital subscriber base. The company’s Eikon financial-services software now boasts more than 40,000 subscribers, up from 12,000 a year ago, Smith said.
Smith did not specify when the layoffs would take place, only that they would occur by the end of the year. He said he expects the company to pay out $100 million in severance.