Dow Jones? Telerate online information business dragged down corporate earnings for the first quarter, with net income plummeting 33% to $25.4m.
The electronic information service lost ground to big name rivals like Reuters and Bloomberg, but the division is suffering from increased competition generally, reflected by an 83% decline in operating earnings on revenues of $229 million, down by 5.4%.
In January, Dow Jones unveiled a controversial $650 million plan to rejuvenate its online business over the next 36 to 48 months. Part of that investment is earmarked for building a comprehensive mix of major enhancements - including historical data and analytical tools, as well as transactional and risk-management services for the fixed income, equities, foreign exchange, commodities and energy market segments.
Key to the whole strategy is the deal with Microsoft to build a new IP infrastructure running under Windows NT. Telerate, now known as Dow Jones Markets Inc, plans to ditch its proprietary model and offer a slimmer desktop system hooked up to an Internet Provider (IP).
The current clutter of boxes and screens on traders? desks is generated largely by proprietary systems that dog online financial information providers. Dow and Microsoft plan to roll out the new systems later this year, running BackOffice, Windows NT Server NOS, SQL Server and ActiveX.
?Dow Jones understands the potential of the communications revolution to offer new products and services to its customers, and is leading the way as the financial services industry reinvents itself,? commented Bill Gates, Microsoft CEO.
Despite harsh criticism from some shareholders about the scale of the scheduled online investments, and calls to kill it off entirely, Kenneth Burenga, president of Dow Jones and CEO of Dow Jones Markets Online Inc, said: ?Dow Jones' strategy for serving customers... into the next century is to establish strategic business alliances with world-class companies possessing key core competencies. By working closely with Microsoft, we will stay ahead of the technology curve.?
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