Adobe barely matches expectations
By May Wong
Associated Press
SAN JOSE, Calif. — With sales hurt by the slowing economy, publishing software giant Adobe Systems Inc. just managed to match Wall Street's lowered expectations for its first-quarter results.
For the three months ended March 2, the maker of Acrobat document-reading and Photoshop editing products reported net income of $69.8 million, or 28 cents per share, up from a profit of $64.6 million, or 26 cents a share, in the year-ago quarter.
Analysts surveyed by First Call/Thomson Financial had lowered their earnings-per-share estimates to 28 cents from 30 cents after the company warned in January of sluggish sales.
The San-Jose based company, the leader in desktop publishing software and the third-largest PC software company in the United States, reported that revenue for the quarter was $329 million, up 17 percent from $282.2 million a year ago.
Adobe, which was relatively optimistic after its last earnings report in December, took a more cautious approach yesterday in its guidance for the rest of the year.
"We had believed our business was relatively immune from the economic downturn in the United States, but we've learned that our customers are deferring their spending,'' Chief Executive Bruce Chizen said in a conference call to analysts.
The company dropped its revenue growth target for the second quarter from 25 percent to about 15 percent. The company did not provide revenue targets for the second half of the fiscal year.
But the company, which recently has released a number of new products and software upgrades, said it was confident that the pace of sales would pick up once the economy turned around.
"Our research indicates a deferring of spending — not that the customers aren't going to buy,'' Chizen said.
The rapid growth in digital images, Internet and network communications and the accompanying need to view and edit all that content has helped fuel Adobe's success. Adobe's Acrobat Reader, for instance, has become a de facto standard for document distribution on the Web.
Industry analyst Elizabeth Sun of the Meta Group said the company is faring "extremely well'' compared to others in the high-tech sector. "They've amassed such strong content-creation tools — I think their future is solid,'' she said.
The company also announced yesterday that John Warnock, who along with Charles Geschke co-founded Adobe in 1982, is retiring. Warnock, 60, had stepped down as chief executive officer in December. He will remain as chairman of the board.
Shares of Adobe closed down $1.13 at $25, but rose $2.38 to $27.38 in after-hours trading.
