Reply #20: Reuters Plans More India, China Spending; Stock Falls

[UpInArms]

http://www.bloomberg.com/apps/news?pid=10000102&sid=a42FT2kmCYPA&refer=uk

July 26 (Bloomberg) -- Reuters Group Plc, the world's largest publicly traded provider of financial data, reported the first sales gain in three years and said it will expand in India and China. The shares posted the biggest drop in more than two years on concern costs of the strategy will erode earnings.

Reuters, which also pledged to return 1 billion pounds ($1.7 billion) to shareholders in the next two years, said in a statement the cost of the plan will eat into earnings and the company's profitability. UBS AG said 2006 profit estimates for Reuters may fall as much as 20 percent before rising after 2007.

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Reuters plans to reduce the number of data centers to 10 worldwide by 2010 from a total of 160 today. Glocer told reporters on a conference call that some product development jobs may go. The company expects the cuts to deliver a further 150 million pounds of cost savings by 2010.

By focusing on markets such as electronic trading and by providing different types of data analysis and news, the company expects to deliver 3 percentage points of revenue growth in 2008. That increase will be in addition to growth at its main business that Reuters says is between 2 and 4 percent a year in the ``long term.''

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