Adobe: First quarter sales light, but cost cutting saves earnings

Adobe said Wednesday that its first quarter sales will fall short of its expectations, but earnings will be a bit better than expected due to cost cutting. 

The company said it expects revenue to be between $783 million and $786 million (statement). The company had set a revenue target of $800 million to $850 million. Adobe said 2009 would be challenging on its fourth quarter conference call and has cut expenses accordingly.

On the bright side, earnings for Adobe held up fairly well. The company is projecting earnings of about 30 cents a share according to generally accepted accounting practices. Excluding items, Adobe is projecting earnings of 44 cents a share to 45 cents a share. The company had projected GAAP earnings of 30 cents a share and earnings excluding charges of 43 cents a share to 47 cents a share.

Wall Street was already factoring in the worst with first quarter earnings estimates of 42 cents a share. Operating margins will meet the low end of Adobe's targets. 

The early reaction afterhours was positive:

In a statement, Adobe said:

"Weakness in its creative and knowledge worker businesses as the primary reason for the revenue shortfall. Seasonal strength in Japan, as well as continued success with its LiveCycle enterprise business, helped to offset some of the weakness in the quarter."

Adobe also set targets for its fiscal second quarter. The company sees operating margins of 21 percent to 26 percent under GAAP with 32 percent to 36 percent margins excluding items. Sales will be between $675 million to $725 million.