Newspaper article THE JOURNAL RECORD

Dow Jones Revamps Telerate; Profits Drop

Newspaper article THE JOURNAL RECORD

Dow Jones Revamps Telerate; Profits Drop

Article excerpt

NEW YORK -- Dow Jones & Co., publisher of The Wall Street Journal, plans to spend $650 million to revamp its Dow Jones Telerate financial information unit amid tough competition from Reuters and Bloomberg.

The development comes as Telerate, which primarily serves investment houses, continues to hurt the company's financial performance. Dow Jones also announced Monday that its fourth quarter earnings were down slightly from a year earlier.

Dow Jones shares tumbled 8 percent on the news, with investors concerned about the cost of the Telerate program and its effect on profits. Dow Jones said 1997 earnings would fall as much as 39 percent below last year. "Dow Jones Telerate is a successful business and participates in a growing global information industry. It has experienced some slowdown recently, and we mean to remedy that," Peter R. Kann, chairman and chief executive of Dow Jones, said in a statement. Telerate's overhaul includes efforts to expand the news and data it provides electronically, make the system faster and easier to use, and improve the unit's management and focus on customers. Dow Jones said the program should not require the company to incur a significant amount of new debt, but it will reduce earnings in 1998 as well as this year. Spending on the overhaul will take place over the next three to four years.. "Clearly, the plan to revitalize Telerate will have a prolonged adverse impact on earnings," said Ed Atorino, a newspaper industry analyst at Oppenheimer & Co., a brokerage firm. "But I think it was something the company had to do." Some analysts in the past have raised questions about a spinoff of the struggling unit, but Atorino said that appeared unlikely as Telerate is an integral part of Dow Jones' strategy to be a premier provider of financial information. …

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