Adobe Shares Jump; Digital Content Boom Drives Profit
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By APThe Associated Press
| 19 Mar 2008 | 11:19 AM ET
Demand for design tools like Photoshop, Illustrator and Dreamweaver and for its Acrobat publishing tool pushed Adobe Systems' profit up 52 percent in the first quarter, but the software maker still forecast just 13 percent revenue growth for the year.
Shares of Adobe climbed more than 10 percent Wednesday.
Compared with the San Jose-based company's 37 percent hike in first-quarter revenue, that forecast tells Global Crown Capital analyst Martin Pyykkonen that troubles in the broader economy might be causing Adobe to be a little cautious, at least with its guidance.
"They are a conservative company normally and somewhat more so tone-wise right now, which is just basic prudence, nothing that I think they are signaling," Pyykkonen said.
At the same time, he said the forecast did seem conservative.
"When you just did 37 in the quarter and you are guiding for 13 for the year, that's one of the things people do get a little frustrated on with Adobe. You know, come on, get real. If you are going to do 13 percent this year, you are basically saying the year is going to fall apart," Pyykkonen said.
The 13 percent growth in Adobe's revenue would bring it to $890.4 million for 2008. The company also issued new guidance that earnings per share would be $1.45 to $1.51 for the year. Excluding special items like stock-based compensation, it forecast earnings per share of $1.86 to $1.92.
"We are not immune to any type of recession, were one to come, and we are keeping our eye on the U.S. business," Adobe Chief Financial Officer Mark Garrett told The Associated Press in an interview Tuesday. Garrett said the company's diversification in terms of products, eography and customers help it weather economic downturns.
For the three months ended Feb. 29, Adobe posted a profit of $219.4 million, or 38 cents per share, according to an earnings report after the close of trading Tuesday.
That was up from $143.9 million, or 24 cents a share, in the same period a year earlier.
Excluding one-time items, Adobe earned 48 cents per share in the latest quarter. On the same basis, analysts surveyed by Thomson Financial had expected, on average, earnings of 45 cents per share on sales of $875.8 million.
Booming growth in digital content, from Web sites to online publishing, drove demand for Adobe's products, the company said.
Adobe shares closed Tuesday at $31.88, up $1.09 or 3.5 percent for the day. In after-hours trading after release of the earnings report, they rose another $2 or 6.3 percent to $33.88.
The quarter was the first for Adobe's new chief executive, Shantanu Narayen, who took over from former CEO Bruce Chizen in December.
Narayen also responded with confidence to concerns about the wider economy during a conference call with investors.
"We know how to balance between investing for the long-term, as well as dealing with any short-term hiccups that might happen. We get all this data, but frankly in many cases these are the times when the strong companies like Adobe actually get stronger," Narayen said.
© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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