REUTERS 2000 Annual Review


	Reuters will be celebrating its 150th anniversary this year. What, in your view, have been the main contributors to the success of the company? An incredible esprit de corps. This is very fulfilling. We are one of the most international companies there is. Also, we have a strong common purpose: to tell the facts honestly and help our customers improve their performance with knowledge and technology. A good ethical base knits us together and enables us to survive the ups and downs of business. People have tended to lose sight of these things as part of a winning long-term proposition. We never forget them. You will be retiring in July this year. What will you regard as your principal achievement as Chief Executive? Exiting smoothly with the business in good shape and a seamless hand-over to a successor I respect. Reuters announced a major new strategy in February 2000 to drive the business forward in the internet age. What progress have you made in the last year? We have delivered on virtually everything we announced for the year. In certain instances we haven't but there have been very good reasons for not doing so. In some cases we have done more than we said we would do. Have you altered your plans now that the dot.com bubble has burst? No. Our plans were laid on the basis of our experience with the internet and its technologies over the last five or six years. We avoided the fashionable pieces with supposedly stellar prospects such as retail and instant e-commerce. Consequently, we didn't get spattered when the bubble burst. We remained focused on the real things such as software infrastructure and the ability to build good content on top of it. The recent falls on Nasdaq and the downgrading of technology stocks have affected the value of the quoted investments within the Greenhouse Fund. What plans do you have for the Fund following your decision not to pursue an IPO? Happily, we realised the value of many of our investments over the last four years. The money has been ploughed back into new investments. We have used minimal shareholder capital in this operation. We would now like to see Greenhouse take in private capital from other groups. We continue to be interested in tapping into technology. In retrospect this may be a sounder route than the original plan for an IPO. How will your core business sustain its current levels of growth in the face of continuing consolidation within financial markets? Financial markets have been consolidating for the 10 years I have been Chief Executive of this company and yet we have still managed to grow despite the difficulties that mergers may present us with. There are several reasons for this. First, large merged companies develop a very sophisticated demand for a much wider range of service such as enterprise software, secure communications and cheap information packages to distribute to their own clients. Reuters is by far the best placed organisation to exploit this range of demand. Secondly, it is always a mistake to think that everything is always going to consolidate. While that trend has been evident, and we could of course be affected by future consolidations, financial markets are also becoming much more varied and demanding. This gives rise to whole new generations of smaller organisations, never seen before, like e-brokers. Furthermore expanding wealth and the relative failure of state pensions to achieve growth for individuals has spurred an expansion in asset management and private banking activities. You announced last year that Reuters would target consumers directly for the first time in its history. How are you achieving this? The internet has had the magic effect of making high-class information available to tens of millions of people outside the dealing room – in offices and at home. We have had tremendous success in selling small packages of information for distribution by our customers to their own customers. We have also set up web initiatives such as reuters.com. We hope to be able to establish routes by which investors who visit our site will have the opportunity, if they want to buy financial products, to visit sites run by our clients. You established a number of joint ventures such as Radianz and Factiva. How will such companies create value for Reuters? Last year's notion that you only had to put together a marketing plan to be worth £1 billion has gone – probably forever. Our joint ventures are operating in well-chosen areas where we needed partnerships to achieve our objectives more quickly. They should each find a big market. But they will have to stretch themselves to win market share because customer expectations are rising all the time. What impact does the internet have on margins? Products delivered over the internet tend to be widely disseminated and low in price, if not free of charge, to the actual consumer. Volume should make up for the lower price of less sophisticated, less comprehensive products. Furthermore, internet technologies are free. We don't have to pay to invent them. The 'last mile' link to the customer is free of cost to us. Customers have their own equipment and have to maintain it themselves. Some people imagine that free information on the internet means that no-one will buy Reuters products. Banks and brokers have to know more than their own customers – so as long as they exist there will always be a need for a premium service. Over time the cheapening cost of communications, of hardware and software, may tend to lower the price of information services. However, we see no sign of this at the moment. All we see is an incremental opportunity to sell more smaller information packages more cheaply. What impact on Instinet's growth will the change of plan for a retail service have? We have been trying to adhere to value-based management. The value in retail last year lay primarily in the very large value the market attributed to retail electronic brokerages. On the whole these high valuations have collapsed. This set us looking much more closely at the basic economics. We found, now that the retail trading frenzy has cooled down, that the economics did not look that good. However, there is no reason for Instinet to exit from retail. It is already running clearing services for retail brokers. It is also intended to offer them execution services. We are now making these services available as a 'private label' type of provider – not a branded one. This should deliver more profit and value to shareholders. How will you maintain the strategic benefit of Instinet to the Reuters Group following its IPO? We have allowed Instinet to operate independently since we bought it. This freedom has helped Instinet to build a significant business and we are now lowering the last barrier to full independence by taking it to an IPO. We believe there are strategic benefits for both sides in a close partnership but they are more likely to be achieved through mutual help and understanding than by complete ownership. We will remain a large shareholder nevertheless. It is a good business close to our own.		Picture: Tara Joseph, Editor Reuters Television, interviews Peter Job about the company's strategy at Reuters Infoworld exhibition of products held in March 2000. Rolf Soderlind/Reuters