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Friday, February 19, 2010

Reed Elsevier Results and the dangling question over RBI

The Reed Elsevier results presented for the first time by a slightly nervous looking CEO contain some clues not only for the future of Reed but also the future of business media in general. At RBI revenues were down 18% and profits down 34%. The revenue fall was too great to catch up the margin with cost cuts. The exhibition business, a "late cycle" business according to the CEO, revenues were down 21%and profits down 31%. There have been rumours that Reed might consider selling REC, but there is no evidence for that.

REC is decribed as " a good business, well managed. It's just cyclical". As Reed freely admits it has little clue as to when the cycle will be up.

The strategy for RBI is simple and painful. Run it for value. (I thought all businesses did this for all assets), realign the cost base to lower rvenues (so cost cutting still a work in progress), grow the data services business (I wish I had thought of that) and make more asset disposals.

Its hardly radical and its a backfoot strategy forced on the business by the failed sale process, the rocky economic climate and the collapse in print advertising.

Interstingly no questions from the floor of the briefing about RBI which means the City has written it off.

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