The Investment Column: Reuters

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IT'S AN often forgotten fact that Britain's biggest, richest and most internationally diverse media company isn't BSkyB or Pearson but Reuters, the financial information provider. A year ago Reuters was dogged by concerns the Internet would short-circuit its future growth. The company also was on the wrong side of a US grand jury investigation into allegations it had misappropriated data from its rival Bloomberg.

The picture today is clearer. The Bloomberg investigation ended without charges last week. Reuters seems better placed in the Internet realm than any of its rivals. Last week it floated its software unit Tibco on Nasdaq, retaining a majority stake worth $1.2bn. It also has interests in other technology ventures, including a holding in WR Hambrecht, the Internet investment bank that Rupert Murdoch took a stake in last month.

But all of this is in the price, even though Reuters stock is down 11 per cent from recent highs, closing 17p lower yesterday at 898.5p after posting near-flat interims. Further progress for the shares is likely to remain difficult given rather mediocre prospects for the second-half revenue growth, continuing softness in emerging markes, not to mention the impact of financial sector consolidation and Y2K.

These factors should hold revenue growth to 5 per cent but that's no reason to sell. Reuters has been quick to squeeze costs, boosting operating margins in the information division, which accounts for half of total sales, by 2 percentage points to 14 per cent. On that basis and the company's potential to benefit from global demand in the financial services sector, Reuters must be reckoned a long-term hold.