By David Nelson, CFA
On Wednesday Thomson Reuters (TRI) reported earnings that missed consensus. Guidance was also below expectations so it’s understandable the stock was hit hard yesterday. Analysts who remain bullish on the company point to their flagship product EIKON, which is supposed to take back market share lost in recent years. The EIKON workstation is similar to a Bloomberg terminal and is meant for professional traders and fund managers like me.
Let me explain in vivid detail why this product is unlikely to help earnings or revenue in the near term. I’ve been a long term subscriber of Thomson Reuters (TRI) products ranging from pure data and news feeds, to workstation software like EIKON. Last week they upgraded to their latest version EIKON 4.
While (TRI) software has always been clunky; the rollout of their latest update is a monument to the arrogance of IT departments who don’t think the process through or talk to their customers to get feedback. We’ve all been frustrated from time to time by software vendors who rollout new versions of products, convinced everything they’ve done was for your own good.
Remember when Microsoft (MSFT) took away the window menu from office products like Word and Excel, making it more difficult to navigate from document to document. Or how about when Apple (AAPL) decided they had a better workflow concept for video editors when they upgraded Final Cut Pro to Final Cut Pro X. Video professionals around the world went bonkers swearing off the product. Editors were quick to abandon ship and switched to their competitor, Adobe’s Premiere Pro CS 6.
32 Bit or 64 Bit
Thinking into the future, Thomson software engineers designed EIKON 4 to run on Windows 7, 64 bit. To effectively run 64 bit you need lots of Ram (Random Access Memory), typically 4 GB or more. Unfortunately, they forgot to ask themselves; what percentage of our customers are actually running 64 bit? According to PC Magazine users of Windows 7 are split evenly between 32 and 64 bit versions.
The Space Shuttle Didn’t Need This Much Memory
Now by most software standards EIKON is a memory hog. It demands a minimum of 4 GB. We’re talking about accessing quotes and creating a few charts; not rocket science. To give you a point of reference, the computer on the original Space Shuttle was powered with just 424 kilobytes of memory. This was upgraded in 1990 to 1 Meg.
Shuttle Memory Board
I bring this up because to the best of my knowledge Windows 7, 32 bit can only see 4 GB, no matter how much you install. Obviously, for 32 bit users it would limit the ability to use other software at the same time. So in the blink of an eye, with little thought or planning, Thomson Reuters (TRI) has managed to piss-off a significant portion of their customers including yours truly.
To their credit, the customer service personal are top notch and willing to go the extra mile to help frustrated clients like me work through what has so far been an impossible upgrade cycle. The problems at Thomson (TRI) are in the bureaucracy that sits above.
What it Means for the Business
I think potential customers may hold off on a purchase of EIKON until the bugs are worked out. Customers who are coming to the end of their contract may re-think their software needs and maybe even go over to the dark side… Bloomberg.
As you might have guessed, I am in the middle of installing Windows 7, 64 bit on our computers right now. Yeah, I’m sure this will go smoothly.
#$%^%^&&**((, CFA
