Canadian financial information company Thomson Corp. said that its earnings rose strongly in the third quarter due to a large, one-time gain related to its sale of higher-education assets.
Thomson’s shares closed at $44.08, up 83 cents, or about 2 percent.
An analyst said investors are waiting for final action on Thomson’s proposed acquisition of Reuters Group PLC before investing heavily in the stock.
Thomson said it hopes to complete the Reuters deal “in or around” the first quarter of 2008.
After paying preferred dividends, earnings surged to $2.97 billion, or $4.61 per share, from $418 million, or 65 cents per share, in the third quarter of 2006. Thomson said the results included a gain of $2.7 billion from the company’s sale of Thomson Learning’s higher education assets.
Thomson has its U.S. headquarters in Stamford, Conn.
After adjusting for discontinued operations, costs related to its proposed acquisition of Reuters Group PLC and other one-time items, earnings totaled $310 million, or 48 cents per share.
Quarterly revenues grew 11 percent to $1.8 billion from $1.62 billion in the third quarter of 2006.
Analysts surveyed by Thomson Financial, who typically exclude one-time items and discontinued operations, forecast earnings of 43 cents per share on revenue of $1.75 billion.
Chief executive Richard Harrington told analysts that company officials were not surprised by the European Commission’s decision earlier this month to move to a second phase of a review of the Reuters deal.
“We’re comfortable with the process and have always planned for the possibility of a Phase II review in our business planning,” he said.
The U.S. Department of Justice will provide Thomson with a decision on its regulatory review by Jan. 15, Harrington said.
John R. Kinsey, portfolio manager at Caldwell Securities in Toronto, said investors are waiting for regulators in Europe and the United States to approve the Thomson-Reuters deal.
“I think their basic business is doing all right. What’s holding the stock back is the takeover of Reuters,” he said. “It’s an ongoing thing that people would like to get it over with as soon as possible.”
The Thomson-Reuters deal is expected to provide more than $1 billion in revenue in the Asia-Pacific market, Harrington said.
In an interview, Harrington said $200 million of the revenue is Thomson’s and $800 million will be from Reuters. The Reuters deal is “transforming our business,” he said.
“We not only get a solid brand, we not only get a solid news business, we get a global footprint,” he said.
For the quarter, costs totaled $95 million. Robert Daleo, chief financial officer, told analysts in a conference call that costs were “a significant $43 million increase” from last year, with $29 million related to the purchase of Reuters.
For the full year, Thomson said it expects operating profit margin to be at or above 2006 levels, despite increasing investments in efficiency initiatives and excluding the proposed Reuters acquisition.
