Wall Street's meltdown and retooling competitors threaten the media powerhouse.
Dirk Smillie -- Forbes
April 1, 2009 -- The most important number on Bloomberg Chairman Peter Grauer's computer screen is the only metric that really matters at the company: "net installs." It's the latest tally of new subscriptions sold for its famed Bloomberg service. About 90 percent of Bloomberg's income comes from these monthly fees, enough to turn Bloomberg into one of the biggest purveyors of financial data in the world, and its founder, New York Mayor Michael Bloomberg, into the city's richest man (estimated net worth: $20 billion).
All that could be changing. With the implosion on Wall Street, the company potentially faces the biggest loss of customers in its history. The failure of Lehmen Brothers alone pulled the plug on some 4,000 Bloomberg terminals, or about 1 percent of its entire base. Thousands more Bloombergs were disconnected in the fourth quarter of last year, says an analyst. That's when 775 hedge funds were wiped out (the total for 2008 was 1,400). Bloomberg disputes those numbers.
"Bloomberg is brilliant at catering to masters of the universe. But it tied its fate to the hardest-hit sectors of Wall Street," says an industry analyst who closely follows the company and refuses to be identified for fear of losing access to their data. "Bloomberg's sales have massively slowed down," he says, estimating the company is averaging a loss of 1,000 "installs" a month. (After this story was first published, Bloomberg spokeswoman Judith Czelusniak contacted Forbes and said the number is "inaccurate," and that subscriptions increased by 15% during the last year. Prior to publication, Forbes had unsuccessfully solicited comment from the company.)
The financial news and data market is dominated by a triopoly: Bloomberg, Thomson Reuters and Dow Jones. Bloomberg's 2,300 news staff in 145 bureaus deliver 6 million stories a year. But the real business is financial data. Michael Bloomberg bet the house on growing his terminal business first among bond traders, then to hedge funds and financial outfits marketing fixed-income securities like mortgage bonds and collateralized debt obligations. The analytics Bloomberg offered were known mainly to sell-side traders.
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