Adobe Wishes it Could Photoshop Those Earnings

Earnings good but not good enough to please Wall Street

Adobe Systems Inc., best known for its Photoshop and Acrobat software, said Tuesday its fiscal fourth-quarter profit grew 11 percent, at the high end of the guidance it gave this month.

The company also affirmed its long-term outlook, sending its shares up 8 percent in after-hours trading.

"As expected, all the scrutiny we had on expenses had enabled us to be more profitable," Chief Executive Shantanu Narayen said in an interview. But sales barely rose in this weak economy, and were slightly below Wall Street's expectations.

The San Jose-based company posted a profit of $245.9 million, or 46 cents per share, from September through November. Excluding one-time items such as restructuring charges and an income tax benefit, Adobe earned 60 cents a share.

Sales inched slightly higher to $915.3 million, from $911.2 million last year.

Analysts had expected a profit of 58 cents per share on sales of $918.3 million, according to a poll by Thomson Reuters. The estimates generally exclude one-time items but according to Thomson they included the tax settlement.

The company had given a disappointing revenue forecast this month, and announced it will cut 600 jobs, or 8 percent of its work force, because of slower sales. Sales of Creative Suite 4, the software package for professional designers that makes up the majority of Adobe's revenue, have been weaker than expected. Narayen blamed the recession.

Narayen acknowledged that 2009 will be a "challenging year," but added he's confident that the company will emerge stronger than before.

Adobe reaffirmed its fiscal first-quarter profit outlook of 30 cents to 35 cents per share or, excluding items, 43 cents to 47 cents per share. Analysts are predicting a profit of 44 cents per share.

The company also still expects revenue of $800 million to $850 million, compared with analysts' estimates of $842.4 million.

Adobe's shares jumped $1.80 to $24.12 in after-hours trading. The stock, which is down about 48 percent year-to-date, had closed up 96 cents at $22.32 in regular trading.

For the full year, Adobe earned $871.8 million, or $1.59 per share, up 20 percent from $723.8 million a year earlier. Revenue for the fiscal year grew 13 percent to $3.58 billion.

Copyright AP - Associated Press
Contact Us