Reuters will axe 1,700 in net strategy

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The Independent Online

Reuters, the news and information provider, is understood to be planning to make up to 1,700 people redundant as part of a two-year plan to restructure the group.

Reuters, the news and information provider, is understood to be planning to make up to 1,700 people redundant as part of a two-year plan to restructure the group.

The move, which will see the £18bn company trim its work force by 10 per cent, is part of its transformation into an internet-enabled business.

The job losses are expected to be made across all divisions of Reuters to improve margins aggressively. In 1999, for example, its information division operated on a margin of 16 per cent. Reuters' chief executive Peter Job wants to increase that to 20 per cent by 2002.

Paul Richards, media analyst at West LB Panmure, said: "They have set themselves a very aggressive target. It is clear that there will be an element of staff cuts as part of this."

However, he said that it was unlikely that Reuters would "cut swaths of staff in one go". Instead Reuters would handle the loss in a "gentle way", re-deploying staff where it could.

The company, which was criticised last year for being slow to react to the internet, launched its online strategy in February. Central to the £500m plan is to use the internet to reach the consumer market.

Mr Richards said: "The internet has revolutionised Reuters' potential distribution channels. It can now offer information to the average consumer. If Reuters manages to hook up tens of thousands of willing consumers then it will have a big effect on profits and margins."

Reuters has formed a series of units within the group which it is planning to separately float off. That includes its incubator Greenhouse Fund, which has investments in 60 companies, and Instinet, its share-trading company which its is planning to float next year. Crédit Suisse First Boston estimates that Greenhouse could be worth £2.9bn and Instinet £3bn, or a total of 442p per share.

The investment bank says that Reuters is worth at least £13 per share. Reuters closed at £12.59 on Friday.

Meanwhile, speculation is intensifying over who will become Reuters' next chief executive. Mr Job, a former journalist who has been with the group for 38 years, is to retire in July and the City is bracing itself for an internal showdown.

The two men understood to be vying for the to job are: Tom Glocer, the aggressive head of Reuters Information who has just been promoted to the board, and Philip Green, who was poached from logistics company DHL to run Reuters Trading Solutions.

While Reuters has recently won plaudits in the City for its new strategy, analysts expect the new boss to crank the company into a higher gear to fend off fierce competition from Bloomberg, Dow Jones and Financial Times Group.

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