Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Paul Steep – Scotia Capital.
Paul Steep – Scotia Capital
A big picture question, firs for Tom and then maybe a clarification for Bob. Tom, you can maybe talk a little bit about Cobalt, what the opportunity is beyond price inflation in terms of cross-selling and clients to get more involved in the platform. It looked like that was the highlight of the investor day.
Thomas H. Glocer
It’s a very innovative platform, and what we’ve seen in our legal business is the more touch points we have, the more of our various services that we can deliver into a given law firm, the greater the reported growth we get from that firm. So the very positive thing is we’re not taking anything away in the existing very successful competitive Westlaw product. It’s not bad to have something that’s going up at 6% in terms of subscription sales, in terms of the carnage we see now, and also because of the sophistication of really the analytics and the search that are in Cobalt, I think we will be able to extend our share leads in the current market, as you mentioned, improve on pricing, although it ends up being a very close working with the customer to make sure that they’re valuing from the additional efficiency and we’re participating in the value that the platform brings, but, yes, it’s a very positive exciting thing for us, and it’ll be coming at a very appropriate time in 2010.
Paul Steep – Scotia Capital
The clarification for Bob is, Tom talked a lot about the subscription. I think he handled that. The recoveries is the bit that I think I’d love some clarification on in terms of what’s the amount of the headwind we face into the next couple of quarters from these sort of pass-through changes that are happening?
Robert D. Daleo
First of all, they do represent a small part of the business, and a very small part of profits. It’s a very low margin business, so while it certainly affects the headline revenue growth, it has little if any impact on the profitability or cost structure of the business, and we have seen recoveries challenged all year long. They represent 10% of the market’s overall revenues. It’s hard for us to predict that. What you’re seeing in recoveries is the revenue challenges of some of the best exchanges, and also some of these exchanges are simply moving to direct billing, which is fine with us too. It’s something that we report on. I think you should know about it, but you should also know that of all the issues that we have this certainly isn’t one that significant, but I think it could last certainly throughout the balance of this year and maybe into 2010, but I really don’t have a window on that.
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