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Magazines > Information Today > April 2003
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Information Today
Vol. 20 No. 4 — April 2003
The Latest on Companies, Search Engines, and Products
By Paula Hane

Once again, the past month's news has been dominated by developments in the RoweCom/divine situation. Following divine's bankruptcy filing in late February, EBSCO continued to move closer to finalizing its purchase of RoweCom's U.S. and Australian operations. According to EBSCO, the final acquisition depends on three factors: 1) U.S. Bankruptcy Court approval, which is expected early this month; 2) the successful closure by EBSCO of its RoweCom Europe acquisition, which was expected to receive French regulatory approval by late March; and 3) the support of publishers, which represent at least 50 percent of the aggregate amount paid to RoweCom by customers—money not forwarded by RoweCom to publishers on the customers' behalf. EBSCO predicted that it would reach the 50-percent quota before the end of March.

Meanwhile, reports indicate that divine now faces the possibility of criminal charges stemming from a federal grand jury investigation. In addition, the civil fraud suit filed by RoweCom against divine is still pending. Libraries and publishers continue to reel from the effects of the debacle.

Search Engine Developments

A series of recent acquisitions reveals the pressures and mounting rivalries in the Web search arena. Competition is so tight that companies are consolidating their capabilities to stay in the running. And all the companies are gearing up to counter Google's massive presence.

At the end of2002, Yahoo! announced that it would buy Inktomi, which had been concentrating its efforts on Web search and its paid-inclusion business after selling its enterprise search software to Verity. In February, Google said it would acquire Pyra Labs and its Blogger publishing tool, thus marking the company's entry into the world of Web log content. (For reactions to the Google purchase, see David Mattison's NewsBreak at

Soon after Google's move, Overture, a pay-for-placement ad service, announced that it would purchase both AltaVista and the Web search assets of Fast Search and Transfer (FAST), including its showcase site, The acquisitions have positioned Overture to supply feeds—accompanied by advertising opportunities—to large Web site services such as MSN (which currently uses a feed from Yahoo!'s Inktomi). Searchers expressed some worries about the Overture ownership. Both AltaVista and AlltheWeb are popular with power searchers, and some fear that this consolidation will result in the loss of innovation and competition. (For more details, see Barbara Quint's NewsBreak at

As this issue went to press, Disney, owner, announced that Google, rather than Overture, would power the Disney sites. The next day, Disney officials reportedly said the company was in discussions to sell its Infoseek Internet assets. These days, it sure is hard to keep track of which engine powers a site or even who owns what.

D&B, Hoover's Update

In early December 2002, D&B made a $7-per-share purchase offer for Hoover's. The deal was surrounded by controversy, however, and an interesting saga ensued. Some investors and analysts were critical of the low purchase price, saying Hoover's was giving away the company. Statements and counter-statements flew back and forth, and a lawsuit was even filed that sought to block the D&B purchase.

Marathon Partners, a 9-percent Hoover's shareholder, teamed up with technology investor Austin Ventures and made a higher offer. The bid was abruptly withdrawn, however, after D&B said it would not raise its bid ( Finally, on March 3, Hoover's stockholders approved the merger with D&B.

A big sigh of relief was no doubt heard in Austin, Texas, and in D&B's New Jersey headquarters. Now Hoover's customers are holding their breath to see what will happen under new ownership. At the time of the offer, D&B said that it planned to maintain Hoover's Online as a separate product offering of its E-Business Solutions division, with Jeffrey Tarr, Hoover's chairman and CEO, continuing to lead the Hoover's business from its Austin location.

Company Financials

It's been a tough year or so for most companies. There has been a lot of belt-tightening and cost-cutting—and no small measure of worries about the economy and geopolitical uncertainties. For many businesses, the story has included sliding revenues, shrinking profits, and dismal stock prices.

Reuters Group, PLC

Reuters Group, PLC reported its annual results for 2002 and recorded its first-ever loss (roughly $794 million). The financial news and price-reporting company did not have a good year, with revenue down 8 percent. Reuters said it would lay off some 3,000 workers over 3 years. It also announced a five-point "accelerated strategy" for stemming its losses. At the same time, the company reported that it was buying, Inc., a provider of global financial information. (For analysis and reactions, see Marydee Ojala's NewsBreak at

Analysts from Outsell, Inc. noted that the Multex purchase fills a content gap for Reuters. The advisory firm said: "Multex owns Market Guide, a source of the kind of high-quality fundamentals data that will complement Reuters' existing strengths in pricing data. Beefing up on proprietary content will enhance its competitive position against Thomson Financial and Bloomberg."

Thomson Corp.

The financial picture was somewhat mixed for Thomson Corp., the Toronto-based electronic mega-publisher. Thomson reported that its revenues grew 7 percent to $7.8 billion in 2002, but net income was down 20 percent. The company said that costs from its acquisition of educational publisher Harcourt General contributed to reduced profits. It also blamed economic softness and market uncertainty for its weaker results. Thomson said it expects the uncertain market environment to continue in 2003 and doesn't anticipate that it will meet its long-term revenue growth targets.

Thomson's legal, educational, and scientific business units outperformed its financial unit in 2002. Thomson Learning's revenues were up 24 percent, while Thomson Financial's revenues declined by 3 percent for the year. However, Thomson Financial recently announced a 5-year global agreement with RBC Investments to provide the Canadian marketplace with 3,300 Thomson Workstations as well as market data and services to RBC. The deal also includes the renewal of 4,000 Thomson Workstations at RBC Dain Rauscher in the U.S. Terms of the agreement were not disclosed.

At the end of 2002, Thomson Financial made headlines when it grabbed a lucrative contract with Merrill Lynch away from Reuters. The deal is believed to be worth more than $1 billion over 5 years.

Wolters Kluwer

While Dutch publisher Wolters Kluwer reported that its 2002 revenues increased 2 percent (to about $4.3 million) and its net income grew 8 percent, it said that profits may fall up to 6 percent in 2003 due to divestments. After this gloomy announcement, Wolters Kluwer's stock price plunged to a near 10-year low. Then, Reed Elsevier's shares also fell, as did those of educational publishers Pearson and VNU. Media outlets reported concerns over reduced textbook orders in the U.S.

Wolters Kluwer also designated new leadership for the company. Starting Sept. 1, 2003, Nancy McKinstry will serve as chair of Wolters Kluwer's executive board. McKinstry is presently a member of the board and will succeed Rob Pieterse, who is retiring.

Some Encouraging Signs

As I mentioned last month, a few companies in the information industry are beginning to show some signs of revenue growth and increased profitability, despite the continuing challenge of tough economic conditions and constraints on corporate spending. Stock prices remain generally depressed, however.

Reed Elsevier

Reed Elsevier released its preliminary results for 2002, which report strong overall growth (with revenues up 13 percent) and adjusted pre-tax profits up 11 percent at constant rates. The full-year revenue for 2002 was about $8 billion. Even LexisNexis, which had been struggling inthe U.S. legal market, performed well and continued its turnaround. Revenues and adjusted operating profits were up 5 percent and 10 percent respectively.

Despite difficult market conditions, the company noted that it had achieved the financial targets it set up 3 years ago. Crispin Davis, Reed Elsevier CEO, commented: "The strong performance in 2002 underscores the turnaround in the business over the last 3 years. We have a strong business, a clear strategy, a well-motivated and experienced management team, and a relentless commitment to execute against our objectives. Despite the adverse economic environment, we continue to see significant opportunities for growth and have a good pipeline of initiatives to deliver on them."

An Associated Press report on the news stated: "The results again proved the resilience of the Anglo-Dutch publisher's subscription-based operations. Reed's portfolio ranges widely, from Construction News magazine to elementary school textbooks."


ProQuest reported its financial results for the year that ended Dec. 28, 2002. Revenues were $428.3 million, compared with $401.6 million in 2001—an increase of 7 percent. Earnings before interest, income taxes, depreciation, and amortization were $137.2 million, an increase of 13 percent over 2001. For fiscal 2003, the company projects total revenue growth of 11 to 13 percent. The press release stated, "Our guidance assumes no improvement in the state of the economy and continued tightening of budgets for libraries."

Premium Content via Microsoft Office

Several information industry providers are crowing about their recently announced alliances with software heavyweight Microsoft. The company released the beta 2 version of its new Microsoft Office System. This suite offers a coordinated set of programs that Microsoft says will address productivity challenges in today's enterprises.

Among its many options, the new system features a Research Library Pane that allows users to search for information from within applications. In the initial release of the product, users can search Factiva's Publications Library, Gale's Company Profiles, or Alacritude's eLibrary. Barbara Quint says this move represents a great opportunity for commercial online services to prove their worth to a broad array of end users, but it does raise some interesting issues. (For more, see Up Frontwith Barbara Quint on p. 7 and the NewsBreak at

According to the announcement, several core Office System products are provided in the beta evaluation kit: beta 2 versions of the new Microsoft Office Suite (Word, Excel, Outlook, PowerPoint, and Access); two new Office System additions, Microsoft Office InfoPath, and Microsoft Office OneNote. Also included are Microsoft Office FrontPage, Microsoft Office Publisher, Microsoft Windows SharePoint Services, and Microsoft SharePoint Portal Server 2.0. Final versions are expected this summer.

For the latest industry news, check every Monday morning. An easier option is to sign up for our free weekly e-mail newsletter, NewsLink, which provides abstracts and links to the stories we post.


Paula J. Hane is Information Today, Inc.'s news bureau chief and editor of NewsBreaks. Her e-mail address is
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