Citicorp plans to sell computer service to Reuters

January 14, 1994|By New York Times News Service

NEW YORK -- Citicorp said yesterday that it had agreed to sell its Quotron financial-information computer service, which has lost money ever since the banking company bought it in 1986, to Reuters Holdings Plc.

Terms of the deal were not disclosed, but Citicorp had offered to pay another company more than $100 million to take the ailing Quotron off its hands, said an executive of the other company, who spoke on the condition of anonymity.

Citicorp also said yesterday that its earnings for the fourth quarter would total about $575 million, more than Wall Street analysts expected.

The company plans to report its financial results Tuesday, but made the preliminary disclosure as a result of the Quotron announcement.

Citicorp did take a charge of $179 million in the fourth quarter, mostly to cover losses related to Quotron.

The acquisition of Quotron will give Reuters, the news and financial-information company based in London, a much stronger presence in the trading of American stocks. Reuters is the

leading provider of terminals for the worldwide foreign-exchange market.

Citicorp's acquisition of Quotron was part of a strategy articulated by its then-chairman, Walter B. Wriston, that banking was an information business.

When Citicorp bought it in 1986, Quotron was renting 100,000 terminals -- 60 percent of the market at the time -- that offered brokers and money managers up-to-the-minute prices and other information about securities.

But Quotron used old technology, and the company was slow to move its service to personal computers. It has steadily lost contracts with big brokerage firms, mainly to Automatic Data Processing and ILX, a unit of Thomson Corp., both of which were quicker to offer services for PCs.

"Quotron lost market share because of its own failure to stay one step ahead of their customer needs," said Pavan Sahgal, editor of Global Investment Technology, a newsletter.

Quotron lost 12,000 terminals in the past year, even though it updated its technology and aggressively cut its prices.

Now Quotron has only 35,000 terminals, compared with 80,000 for Automatic Data Processing and 25,000 for ILX, according to Waters Information Services. Reuters has very few stock quotation terminals in the United States, although it has such terminals in Europe.

Citicorp took a charge of $400 million to write down its Quotron investment in 1991, and said at the time that it no longer considered Quotron one of its core businesses.

Information industry executives said the banking company had been trying to sell Quotron at ever lower prices, and ultimately made an unusual offer of paying another company to acquire it and assume its losses. Quotron lost $103 million in 1991, $40 million in 1992 and $33million in the first nine months of 1993.

Citicorp has resisted simply shutting down Quotron because it wants to avoid offending customers, many of whom have extensive relationships with the banking company. Quotron's largest remaining customer is Paine Webber Inc.

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