Are you ready for another round of Bloomberg vs. Thomson-Reuters?

Recall those heady days before Bloomberg really took off? The company was one of several aiming to colonize desktops around the world. Slowly the competition fell away--firms with names such as EJV, Bridge and others. Bloomberg was able to establish itself--and its then-stunning new business model and its quirky ban on the word "but"--as a media, technology and financial services power. The future was dazzling. As of late, it seems more like an aging giant--more like Microsoft, less like Google. And the desktop battle is interesting all over again, thanks in part to newly resurgent Thomson Reuters. 

You would have to think that the financial markets distress would hurt both companies, though the reality of long subscription periods suggests that the impact may just now manifest itself. According to a recent prediction from Burton-Taylor, both face big revenue losses for 2009, as spending on data via leased terminals could shrink 3 percent. This will not be fatal for either company, but it does raise the stakes. Both sense the time to dazzle the market is now. Both are tinkering with new delivery vehicles--iPhones and BlackBerries--and mulling new services, bent on carving out more of the market. 

Thomson Reuters seems to holding on fairly well--for now. Its profit for the first quarter, excluding acquisition and other costs, fell to 40 cents from 44 cents, beating analysts expectations. However, its markets division, which accounts for 60 percent of revenue, fell 7 percent, with flat profits. 

Citigroup argued last week that Thomson Reuters could fare better than Bloomberg because the latter had been more exposed to harder-hit fixed-income and asset-backed securities traders and hedge funds, according to the Financial Times. The company says that the integration post-merger is going well, a year after the blockbuster deal. And it benefits from a more diversified revenue base; its legal unit is a revenue machine. Still, some analysts think the financial crisis is about to hit home. UBS analyst Jeffrey Fan has a "sell" rating on the company for that reason. 

Bloomberg, still a private company, is perhaps even harder to gauge. Recently, it was forced into a rare round of layoffs, concentrated in its TV and radio operations. By one estimate, leasing of its ubiquitous terminals have fallen 2.8 percent since November. But management perhaps senses it's time for a game changer. The New York Post reports that for the first time Bloomberg is hiring equity analysts, who will "sift through data, provide revved-up equity research to assist equity analysts, traders and portfolio managers." They will not provide investment opinions on companies, which would put it in competition with customers. The company will also hire a chief marketing officer for the first time. In addition, it has embarked on an even more aggressive news aggregation strategy. 

Obviously, both will go to great lengths to defend their turf. The big question is: Will they be willing to take the gargantuan step of discounting significantly? - Jim