August 21st, 2007

Reuters defensive play: acquires StarMine

Posted by Dennis Howlett @ 10:27 am

Categories: Enterprise applications

Tags: XBRL, Reuters Ltd., Dennis Howlett

Reuters is acquiring StarMine for an undisclosed sum. StarMine provides specialized analysis and equity research tools to 350 investment companies. To me this is a defensive move. At one time, Reuters, along with Bloomberg and Thomson had the provision of real-time information for the investment banking market to themselves. But as more information becomes publicly available and investment weblogs become more popular, investment analysts are increasingly turning to other sources of information. There are other threats.
When the SEC adopts XBRL it should make cross company comparison much simpler because the XBRL format makes filing data interactive and requires a standardized approach. That may be a few years off but the pressure is on with the UK already mandating XBRL filing by 2010. To date only some 40 US filers have adopted XBRL with Microsoft being the first for documents like 10-K and 10-Q.

While the SEC mulls whether to mandate XBRL, it gives companies like Reuters a breathing space during which they can carve out a position by providing solutions that remove a level of work. But that may not be enough. As Brian Sommer recently said:

I made a career out of scouring divorce proceedings, civil suits, IPOs, anti-trust filings, secondary offerings, etc. Today, I can do this far faster and more efficiently from my laptop with an active Internet connection. Now, the amount, velocity and power of such information is tremendously useful for researchers, analysts, litigators and prospects.

That was in the context of investigating software vendors but the same techniques apply to any industry.  Reuters has a lot more than information provision in its portfolio but as time goes on, I expect to see those types of service become increasingly commoditized.