Information companies still feel the negative effects of the Credit Crunch. Most CEOs do not see any improvement short term. Most pronounced has been the effect on rating agencies and credit information companies that are heavily consumer oriented, such as Experian, Fair Isaac and Acxiom.
Moody’s announced in its Q1 earnings call that US$ 200 – 250 million in revenue from structured finance products may be ‘extinct’ permanently. For the full year Moody’s expects revenue to show an annual decline in the mid to high-teens per cent with operating margins in the mid-40 per cent.
Raymond McDaniel, Chairman and Chief Executive Officer of Moody’s, said, “Moody’s revenue results in the first quarter clearly reflect the difficult credit market conditions in which we are operating. Strong growth at Moody’s Analytics, our solid base of recurring revenue, and the positive effects of our cost management efforts helped to mitigate the impact of the operating environment on overall performance.” Mr. McDaniel added that, “We remain cautious about the likely pace and strength of recovery in credit markets in 2008 and confirm our existing EPS guidance of $1.90 to $2.00.” Additional information can be found on page 15 (April 2008 Issue)
In the meantime the Security & Exchange Commission (SEC) has started its inquiries into the rating agencies, sending teams of examiners and collecting documents. In an effort to head off drastic new regulation, the agencies have begun to think about changing the way they do business. Moody’s stated in its Q1 earning call that it has acted on many items the SEC had identified. S&P launched a comprehensive series of measures to enhance governance, analytics, information and investor information.
Details of S&P’s Leadership actions are found on page 12 (April 2008 Issue)