For Reuters, the news just keeps going from bad to worse

We all know that Reuters is in trouble but a research note from UBS Warburg yesterday shattered what little confidence investors still had in the information and news giant. In a world of tame notes and neutered analysis, the UBS research stands out as a devastating commentary on a major company.

The Reuters business is structurally unsound, according to the 84-page note, which saw the company's shares drop to an 11-year low, down 6 per cent at 188p. According to UBS, Bloomberg, which is an upstart, now has a 40 per cent share of the financial information market, while Reuters holds 32 per cent. However, there are no public figures on market share.

What seems beyond contest is that, over the past five years, Bloomberg has been gobbling up share, while Reuters has stood still. Other competitors have fallen away, leaving a global duopoly.

The basic problem for Reuters and Bloomberg, is that their main clients – those in the dealing rooms of the world's big banks and brokerages – have seen a severe downturn in business. They are having to fire thousands of employees and, for each person lost, that is one less terminal required. Also, individual traders often have both a Reuters terminal and a Bloomberg machine. Banks now regard this as a luxury and are choosing between the two.

Reuters was always strongest in foreign exchange business (where it also has a currency trading system), while Bloomberg has its base in bonds. The key battle ground, then is equities, and here Bloomberg has trebled its market shares to more than 33 per cent over the past five years, according to UBS.

Reuters has developed a very different business model to Bloomberg. While the US company offers a simple, basic proposition of a single product, at a single price, Reuters has lots of products on offer at a whole series of price points. It is only at the top of the market, at the $1,200-a-month machine level, that the two compete head on. Also Reuters has an open system, which allows customers to integrate it with their IT systems, unlike Bloomberg.

Reuters, which reports third-quarter results next week, has cut costs aggressively but no matter how quickly it reduces costs, its markets are falling away even quicker. Avoid.

It's not so gloomy at First Technology

There are some very nice dividends out there among the cyclical stocks whose share prices have been hit by the apparent slippage back into recession that manufacturing industry data has indicated in recent weeks. First Technology is one example, and it was taking decisive action yesterday to shore up its margins and cash flows to protect its payout, which gives its shares a prospective yield of 5 per cent.

The company makes a variety of sensing and security components, mainly for the car manufacturing industry, and yesterday it said it was closing its Farnborough factory making fuel cut-off devices, with the loss of 55 jobs.

The restructuring will save £1m a year, but it will cost £1.5m initially. The costs are not a burden, since the group will still have no debt at the end of its financial year. That puts it in an enviable position in its sector, and underscores the long-term sustainability of the dividend. First Technology's profits were driven in the Nineties by its new products such as the fuel cut-off, but the worry now is that this product (to be made in the US and the Dominican Republic in future) and others are mature products with reducing margins. Meanwhile, the economic uncertainty is discouraging First's customers from investing in new technology.

So things are gloomy, but not as gloomy as the share price, down 13.5p to 194p, suggests. Undervalued.

Air Partner best left to fly on its own

It's a funny old bird, Air Partner. Sometimes it soars, sometimes it just waddles along, but it is always unpredictable. Yesterday's giant special dividend was the third since the mid-Nineties and left many asking why the company couldn't just hike the dividend proper.

Tony Mack, the founder and 41 per cent shareholder, has certainly squeezed some great results out of his private jet chartering business this past year, despite the huge disruption caused by the 11 September attacks. In some ways the events worked to Air Partner's advantage, as many travellers were put off scheduled flights. But the economic turmoil, and the ongoing slump in corporate dealmaking and flotation activity, has also meant many of Air Partner's best customers have been using the group less often than previously.

Things are improving, particularly now that the anniversary of 11 September is past. Even so, the best Mr Mack could say is that day-to-day trading is at levels on a par with last year and, with an increase in costs after hiring staff from a bankrupt US rival, it looks as though earnings will fall in the current year from the bumper figures reported yesterday.

Profits jumped to £4.0m in the year to 31 July from £2.2m the year before as a new office in Australia moved into the black. An office in Atlanta, Georgia, was opened and shut within months when sales failed to take off. The company promised to double the number of offices from its present 17 in five to 10 years.

Customers are leaving it to the last possible minute to book flights and neither Mr Mack nor the company's brokers were making any claim to know whether there would be growth this year. In these circumstances, a company that often behaves as if it were a private firm rather than a public company might not be the best investment bet.