Market share claims from Wolters Kluwer, parent to CCH, and Thomson Reuters are a bit like author Garrison Keillor's description of his mythical town of Lake Woebegon. It's a place where all children are above average. And during earnings Webcasts this year, top executives from the two companies each said their organization is gaining market share. But there's one difference this year.WK issues financial reports for its half and year, not for each quarter, so the comparisons are made here for the half ended June 30 when its Tax and Accounting unit had revenue of $639 million for the half, up from $623 million the prior year.
The Thomson Reuters operation had first half revenue of $505 million, up from $470 million. The operating profit margin for Thomson's Tax & Accounting business was 13.3 percent down from 16.4 percent. WK posted an operating margin of 21.5 percent, virtually unchanged from a year earlier.
One notable difference was the impact of acquisitions. Wolters Kluwer, which had organic revenue growth of 2 percent, bought no new companies in the tax and accounting market. Although Thomson saw a 7-percent improvement in revenue for the half, revenue for existing businesses were up 2 percent and the other 5 percentage points came from the acquisition of Sabrix and Abacus.
The market share discussion got some impetus when Thomson CEO Tom Glocer was asked about statements from both Reed Elsevier executives and WK's CEO Nancy McKinstry that they were seeing no market share erosion because of the competition from Thomson.
"I've been told some of our competitors are sensitive to remarks we make on our calls," said Glocer. He gave one example, WestlawNext, which he said had attracted "hundreds to 1,000" new smaller customers from competitors. He did not cite which vendor the new business came from nor did he provide the names of any tax and accounting products where he was claiming gains.
At the WK event the day before Glocer's, one analyst asked about market share claims and also noted that before the recession, Thomson had 6-percent organic growth versus 4 percent for Wolters Kluwer in the accounting space.
McKinstry, who pegged the dates for that as 2007, said that her company is the largest company in tax and accounting globally. She continued that compared to competitors, "We are also significantly more profitable. Where we are very strong is in the firm part of tax and accounting market globally and we continue to gain share there."
She conceded that Thomson has a bigger relative foothold in the corporate market where it "has some strong assets." But she contended that "We are continuing to increase share in the corporate space and firms as well."
No matter what the claims, the public isn't likely to get more definition. Thomson was asked how it measured market share, for example via revenue from products sold, number of users or number of licenses. A spokesman said the company would not have a statement regarding the issue. Wolters Kluwer did not provide a response to the request.
