Thomson Reuters Corp named Jim Smith to the position of chief operating officer, putting him into stronger contention as a possible successor to Chief Executive from Tom Glocer, who is under pressure to revamp the company's slow-growing Markets business.
Thomson Reuters also said on Wednesday it would merge the Markets division with its Professional business 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.
Suzanne Stein, an analyst at Morgan Stanley, said the announcements on Wednesday showed that Thomson Reuters remains in a period of turmoil.
(Thomson Reuters) will need to show improved results in Markets, and continued strength in Professional in order to give investors confidence it has solved its internal issues, she wrote in a research note.
Thomson Reuters shares, which have lost more than 20 percent this year, slipped 1.8 percent in New York and 0.6 percent in Toronto.
Smith, 52, was chief executive of the company's Professional division, which sells legal, tax and accounting products such as WestlawNext.
That division, which accounts for about 40 percent of total revenue, generated revenue growth of 8 percent in the second quarter, compared with just 1 percent in the Markets division.
I think it says that Jim is being groomed as a future CEO of the Thomson Reuters organization, said an analyst with a major investment bank who covers the company.
Glocer, 51, said in July that he had taken direct responsibility for the turnaround of the Markets business, which accounts for 59 percent of the company's revenue.
He has about a year to accomplish that, people familiar with the thinking of the board and the controlling shareholder, Canada's Thomson family, said at that time.
Smith, a former journalist, joined the Thomson newspaper group in 1987, eventually becoming chief operating officer of Thomson Corp, which acquired Reuters Holdings Plc in 2008.
He is known as a good communicator and forthright executive who gives his team autonomy along with accountability.
It sounds like it's going to be a culture of accountability in the organization, said the investment bank analyst.
Glocer said the merger of the two operating businesses was meant to capture operating efficiencies from scale.
There may be some layoffs as a result, he said, though any cutbacks would affect chiefs, not Indians in front of customers.
Having two big standalone organizations within Thomson Reuters had been an impediment to running the company, Glocer said. 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, who was once considered a potential candidate to take the top job at the company.
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?
Company executives were not immediately available to comment on the timing of the reorganization.
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.
Overall revenue rose 4 percent to $3.2 billion in the second quarter.
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 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.
Thomson Reuters shares slipped 1.8 percent to $27.85 in New York and 0.6 percent to C$28.70 in Toronto.
(Reporting by Jennifer Saba, editing by Tiffany Wu and Ted Kerr)