Adobe's third quarter solid, but outlook is light

Adobe's third quarter solid, but outlook is light

Summary: Adobe's fiscal third quarter earnings were solid, but the outlook for the fourth quarter was a bit light relative to expectations.

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Adobe's fiscal third quarter earnings were solid, but the outlook for the fourth quarter was a bit light relative to expectations.

The company reported earnings of $230.1 million, or 44 cents a share, on revenue of $990.3 million, up 42 percent from a year ago. Non-GAAP earnings were 54 cents a share.

Wall Street was looking for earnings of 49 cents a share on revenue of $985 million.

That was the good news. The bad news?

Adobe projected fiscal fourth quarter revenue of $950 million to $1 billion, or flat sequentially (statement). Earnings for the fourth quarter will  be between 35 cents a share and 41 cents a share. Non-GAAP earnings will be between 48 cents a share and 54 cents a share. Wall Street was expecting earnings of 53 cents a share on revenue of $1.03 billion.

In other words, Adobe will have to stretch just to meet current Wall Street estimates. Investors weren't pleased as Adobe shares were hammered in afterhours trading.

Still, in a call with analysts, Adobe CEO Shantanu Narayen was bullish on the outlook and said the company is "on track to deliver record revenue in fiscal year 2010."

Two trouble spots for the Creative Services segment, with weaker than expected revenue in Japan and in the education verticals, but the company was quick to note that this wasn't the results of market share loss but rather economic forces in Japan and a weaker back to school season across the board.

He also addressed the upcoming release of Acrobat 10, due out late this quarter, by noting that it brings consistent growth. The product doesn't see the same immediate upticks that come with the release of other products. Instead, it sees adoption over a longer period of time.

Narayen maintains that "Adobe is at the center of the digital content revolution." Using Adobe products, he said, customers can create, deliver, optimize and monetize across the many platforms, screens and devices.

"Nobody is better at monetizing content" in a multi-screen environment than Adobe, he said.

Topics: Banking, Enterprise Software

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4 comments
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  • Wow Talk About Fluffing it Up!

    If this was an Apple earning report ZDNet would be heralding the demise of Apple.
    CowLauncher
    • Awww, did him get his wittle feelwings huwt?

      @CowLauncher

      It's not [i]everyone's[/i] mission in life to praise and worship Apple.
      SonofaSailor
  • this is a formula response

    I'm sure any veteran investor here would expect a report like this. When the economy is bad there is always a good chance that outlook have multiple dips. If you are reporting good profits, you don't want to come out and say "yay we made lots of money and with luck we'll keep making good profits". If there is a dip in the future and you don't make a good profit, wall st will hammer you. This is why most companies prefer the "cautious optimistic" comment. The key for most companies is steady predictable growth, not giant spurts which could kill you in the long run. Anyone remember Dell with their quarter after quarter of 75% profit increase in the 90s? Then all of a sudden its 40% profit increase and their shares went free falling and never recovered. There are dozens of companies in that position.
    rengek
  • RE: Adobe's third quarter solid, but outlook is light

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    jordanholland23