Telerate Budget Review: Managers Eye Cuts Worldwide As London Trims Some 30 Jobs

Dow Jones Telerate managers are in the throes of a budget review aimed at reducing expenses at the vendor by up to 10 percent. The vendor has already begun the process in London, where some 30 staffers have been let go over the past few weeks.

In North America, sources say, expense cuts will vary from department to department, and will likely include personnel cuts in some areas.

According to some sources, the plan is to bring expenses down to as much as 10 percent below what they were in July of this year, and to keep them at those levels. To achieve that, these sources say, managers may choose to cut headcount, or whatever makes most sense.

"We're going through a general tightening-up period at Dow Jones Telerate with budgetary reviews going on now and until the end of the year," says the spokesperson for Dow Jones. "In some areas, there will be some [personnel] cutbacks, but there will be hiring in others." Indeed, the vendor has several new hires pending (see Herd).

"Overall," the spokesperson continues, "it isn't a material number of people. You might also have some departments put together, things like that."

The review follows relatively strong revenue reports for the past two quarters. But Telerate's overall performance was harmed by greater than expected expenses, sources say -- an imbalance that the current budget cuts are meant to redress.

Last quarter, operating costs were up 12 percent at Telerate over the same period the previous year. As a result -- despite the fact that revenue grew seven percent -- operating income dropped 13 percent (IMD, April 26). At the time, Dow Jones attributed the continuing rise in expenses to product and technical development.

As top expense-eaters, officials cited the vendor's Microsoft Corp. Windows-based Telerate Workstation platform, its Dealmaker foreign exchange trading platform and the Windows version of the Matrix data and analytics service. In addition, some of the cost was allocated to pay for exclusive third-party services, network and technical upgrades and development of the as yet unreleased elementized feed. It's unclear to what extent those projects will be affected by the current round of cuts.

In the quarter prior to that, revenues rose by 8.9 percent, while increases in operating costs dragged income growth to a mere 0.1 percent over the same period the previous year (IMD, Feb. 1).

Most of those laid off earlier this month in London were either part of the regional headquarters of Telerate Europe/Gulf, or members of the Telerate U.K. country unit, which is also centered in London.

"This is an American announcement," says the spokesperson for Telerate in London, referring all questions on the cuts to Telerate's worldwide headquarters in New York, whence she says the impetus came.

The cuts are being implemented as members of a publisher's employees union -- representing 2,500 of the 10,000 employees of Dow Jones -- have sharply criticized the salary of Peter Kann, the company's chairman and chief executive officer. The union says Kann's pay, including potential stock awards, came to $1.9 million last year.