We were expecting Reuters to have a reasonably tough time, given what's going on in the world

Chris Kenny Smith & Williamson

An additional 500 jobs will be slashed in addition to the 1,100 jobs cut in July, bringing the total to 1,600 - equivalent to about one tenth of the firm's workforce.

This time editorial jobs will be on the line too. Last time, the company's 2,500 journalists were spared.

The news came as Reuters reported a 4% rise in earnings to £920m during July, August and September; the third quarter of 2001.

During the previous six months, the company's sales grew by 14%.

Slipping share

The rise in earnings was slightly higher than the market had expected.

Tom Glocer during happier days

But then, those expectations were far from high in the first place.

"We were expecting Reuters to have a reasonably tough time, given what is going on in the world," said Smith & Williamson fund manager Chris Kenny.

Reuters' current trading looked "terrible" added the investment bank Credit Suisse First Boston.

Welcome savings

The company's share price has fallen 40% this year.

Its third quarter result initially boosted its share price to 675p, but it slipped back during the afternoon to 623p, a 4% fall, due to concerns about the future.

Reuters said the job cuts would help it cut costs by $220 by 2003.

That savings target is £30m higher than its old target.

"We are taking the tough decisions needed to improve our operating margins in the near term and position ourselves for stronger growth when markets recover," said chief executive Tom Glocer.

Customers in trouble

Reuters' core business of selling financial news subscriptions to investment banks has been hit by cutbacks in the world of finance.

And analysts feared that Reuters could be hit hard again when it is time for the investment banks to renew their subscriptions.

We would expect to see a fall-off in subscribers given the lagged effect," said Hilary Cook, director of investment strategy at Barclays Stockbrokers.

Weak year-end

Ms Cook praised Reuters' efforts to cut costs, but added that Barclays remained "cautious" about prospects for the rest of 2001.

The company expects to see earnings growth slow further towards the end of 2001, to 1-2%.

Previous estimates had predicted revenue growth of 3% for the second half of 2001.

Reuters will slash more than a third off dividends compared to last year, from 16p to 10p

In the City, Reuters shares closed 46p, or 7.1%, down at 604p, the worst performer on Tuesday among stocks included in the benchmark FTSE 100 index.