US Report: Adobe does it in Q4

It's been a tough year for Adobe, but things look like they're coming together for the software house

Shares of Adobe Systems Inc. jumped 5 59/64 to 44 1/16, or 15 percent, today after the company reported strong fourth quarter earnings. In the quarter, Adobe reported a profit of $50.3 (£30.64m), or 78 cents a share, on record sales of $246.7m (£150.43m). The results included an investment gain of 2 cents a share. First Call consensus expected the desktop publishing software developer to earn 64 cents a share in the quarter.

In the year-ago quarter, Adobe earned $46.8 (£28.5m), or 64 cents a share, on sales of $227 million. "Adobe had a strong quarter, including record-setting worldwide revenue from Adobe Illustrator and Acrobat products," said chief executive John Warnock in a prepared release. "Though cautious about the outlook in Japan, we are taking the right steps to drive 15 percent annual revenue growth for the company in 1999, and an annual operating margin of 25 percent."

Company officials said they expect to match analysts' profit estimates of 51 cents a share in the first quarter. In the quarter, application products sales improved to $208m (£127m) compared to $181m (£110.4m) in the year-ago quarter. However, licensing sales fell to $39m (£23.8m) from $46.4m (£28.3m) in the same period last year.

For the fiscal year, Adobe posted a profit of $105m (£64m), or $1.55 a share, on sales of $895m (£546m). In fiscal 1997, it earned $187m (£114m), or $2.52 a share, on sales of $912 (£556m).

On Monday, CIBC Oppenheimer cut Adobe from a "buy" to a "neutral" rating. Earlier this year, Adobe shares went into a funk after it missed third-quarter earnings estimates and shuffled its management team.

Last quarter, it earned only $152,000 (£92,000) on sales of $223m (£136m). The stock slumped to a 52-week low of 23 5/8 in August after peaking at 51 7/8 in May.