7/25/13

LexisNexis Announces Headcount Reduction

Law Technology News (LTN) is reporting this morning that LexisNexis (LN) will be reducing their headcount by approximately 500 employees in various locations in the United States. You can read the item here.  LTN is reporting that the statement was issued by Marc Osborn, senior director of communications for its Research and Litigation Solutions unit.  LN had not responded to my request for more information at the time of this post.

I wonder if this due in part to the adoption rate of Lexis Advance not meeting expectations?  I'm not aware of solid data on this point but I do know that Lexis seems to be experiencing challenges similar to those experienced by Thomson Reuters with WestlawNext.  I have some thoughts on this but will leave that as a post for another day.

UPDATE:
I just received this response from Marc Osborn at LexisNexis in response to my queries:

LexisNexis continuously reviews its needs, operations and other factors to identify what resources and services are necessary to optimally support our customers and improve business operations. As a result of this ongoing process, we regularly build teams in certain areas of the business and reduce in others to be able to deliver next-generation solutions to customers.
UPDATE #2:

Reed Elsevier is the parent company of LexisNexis.  A cursory review of the Reed Elsevier Interim Results for 2Q 2013 indicates that revenue declined during the first 6 months of 2013. The transcript of the quarterly earnings call to analysts also referred to a decline in growth at the Earnings per Share (EPS) level.  Although it would be interesting to see the effect LexisNexis had on these numbers, it wasn't available at this time.  Unfortunately, it is common for businesses to reduce expenses in order to increase (or prop up) EPS rather than find ways to address the decline in revenue.  This is a temporary solution at best.  Depending how this is done, this can result in the business being ill prepared to meet customer demands or to keep their products fresh and relevant.

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8 comments:

Aussie Lexis User said...

Thanks for the updates - I appreciated this article as an avid Lexis fan in Aussie.

Anonymous said...

Your comment about Lexis Advance is probably right. One anonymous insider blogged that Advance is not yet profitable because of the complexity of the product. Further, Lexis is shutting down other systems in anticipation of moving those customers to Lexis Advance, which they may not want to adopt. The layoffs are motivated by these worrries and realities.

Anonymous said...

You got it. Lexis Advance has been the New Coke of the legal information industry. Customers are not loving it.

LN is between the proverbial rock and a hard place. It has invested a huge amount of money in LA, creating capital costs that have to be paid back, it has effectively doubled its system operation costs but has zero new revenue to show for it.

Look at the numbers:

Profit was up: $4.6M.
Revenue down $10.7M

Profit: $160M
Revenue was $1,200M

Compare West
===========
Revenue: $1,640M over the last 6 months (up 4%)
Profit: $456M over the last six months (up 2%)

Note where the trend line is going. With another $11M drop in revenue and a parent demand for another $5M in profit, there are going to be a lot more layoffs.

Anonymous said...

Because there are so many unexpected costs with trying to fix the Lexis Advance back office, it is not surprising that the short-term fix of cutting staff is taking place. It will hurt in the long run, but the top execs get to show they have "turned things around".

Anonymous said...

Go back to the reorganization that took place right after Andy Prozes retired as CEO. All of the current senior management were put in place because of their perceived success in getting Lexis Advance to market. All of their peers who were not directly involved with LA were cut loose.

As we all know, Lexis Advance has turned into an Edsel. The management has decided to double down rather than admit mistakes and adjust.

Of course there are a lot of mistakes to go around at LN

1. The horrible design of LA (and the new UI coming out is not going to help)
2. Incompetent CDI that has no idea how to test products.
3. Product development at LN is incapable of doing anything but copy what others are doing.
4.The new platform was supposed to streamline application development. Instead it is overly complicated, costly to develop on, and delays implementation. The platform was then oversold, giving the expectation was that all LN applications would run on it. The platform needs major development to support International applications.
5. As mentioned in another post, business systems are a tangled mess.
6. As mentioned previously, RE expects a return on their LA investment now.

Unless RE steps in to clean up this circus (unlikely as RE created this circus), they are going to take a bath when they try to sell LN to some stiff.

What does RE have to sell now?

A buyer doing diligence is going to find:

A) It gets no development capability. When RE bought LN, it was a technology company capable of doing highly advanced software development. RE has destroyed that, leaving a company that has to offshore to India everything.

B) It gets a codebase of ancient mainframe and new Indian spaghetti that has to be constantly rewritten.

C) It gets no capability to develop winning products. The new buyer gets a product team that developed Lexis Advance. 'Nuff said.

D) It gets no stable customer base. The current customer base is running on a costly, antiquated mainframe system that are more likely to migrate to other vendors than to LA.

The only valuable asset LN has left after years of RE mismanagement is content.

A new buyer would have to view a LN purchase like an extreme This Old House project where only the shell of the house remains. The buyer would get a solid base of legal content. It would need to plan on investing a further $1B or more to:

I. Build a new product team (hopefully, one that does not consist of retreads from West).
II. Build a new development team.
III. Build a new product delivery platform.
IV. Build new business systems.

When RE does sell LN, it will probably be for less than the $1.5B they bought it for.

Anonymous said...

Interesting that there are no new comments, or even a press release, about the latest wave of Lexis layoffs instituted in mid November. Maybe that's because Marc Osborn is 'out' and no one is left to author a dignified statement.

Greg Lambert said...

Anonymous,

I have yet to hear or read anything on layoffs. I'll start asking around. If you have more information, let us know.

-Greg

Anonymous said...

There was a "reorganization" among the business units and as a result, there are now a bunch of people, a lot who were long-time employees, out of a job.

 

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