Investment column: Reed Elsevier

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IT MAY be less than a month before Crispin Davis takes over the hot seat as chief executive of Reed Elsevier, but for the struggling media group's investors the day cannot come soon enough. Things continue to go from bad to worse at Reed, and after three profits warnings in a year, yesterday's interim figures still managed to disappoint. The result was a 9 per cent fall in the share price to 424p, close to its 12-month low.

Although the 10 per cent slump in pre-tax profits to pounds 371m was in line with market expectations, there were further stumbles at divisional level. The Cahners business information division saw operating profits sink by almost half, with sales growth non-existent and costs rising. The Lexis-Nexis business information business continues to be outmanoeuvred by rivals such as Westlaw, which makes its service available free to US law students in the hope of making them lifetime users.

As a marketing man, Crispin Davis will hopefully have some ideas in this department. His impending strategic review may also pose questions about the structure of the group. The business-to-business division may find itself thrown overboard. Mr Davis will also be expected to speed up Reed's investment in new media, where its transfer of content to electronic media has been slow compared to rivals.

The good news for Reed shareholders is that much of this is already in the share price. With the Wolters Kluwer price also fading, the merits of a merger between the two may resurface.

On reduced full-year profit forecasts of pounds 705m the shares trade on a forward multiple of 17; cheap for this sector, but they are unlikely to make much headway until there is solid evidence of improved trading.