The software outfit forecast higher profits ahead as it prepares for its biggest-ever product launch
Adobe Systems (ADBE) announced stronger profits during recent months and forecast better results ahead. Investors, betting on how CEO Bruce Chizen will fare in his efforts to launch new software, bid up Adobe's stock price on March 21.
The San Jose (Calif.)-based software developer, best known for its Acrobat products, had net income of $143.9 million during the first quarter ended Mar. 2, compared to $105.1 million during the same period last year.
"As Adobe prepares for the biggest product launch in our history, we are excited about our opportunities and bullish about our prospects for another year of strong performance," CEO Chizen said in a press release March 20.
Chizen has been working hard to bring out new versions of the product Creative Suite 3, which is supposed to bundle Macromedia's Web design products like Flash and Dreamweaver with Adobe's print design products like Photoshop and Illustrator. The software is expected to ship in spring 2007 (see BusinessWeek.com, 12/27/05, "Tough Choices Ahead for Adobe").
As Chizen works on launching his new products, Adobe had revenue of $649.4 million, compared to $655.5 million during the same period last year.
"We believe sales were hurt by anticipation of the launch of CS3 in May 2007, but we expect CS3 to be a major revenue driver for the reminder of FY 07 (Nov.), along with continued strength from Acrobat products and the mobile and devices business segment," Standard & Poor's equity analyst Jim Yin said in a research note. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.) Yin maintained a hold opinion on the stock.
Chizen is betting on improving results. Excluding items, his company earned 30 cents per share during the first quarter. During the next, Adobe expects to have earnings per share between 34 cents and 36 cents. The consensus estimate was for 35 cents a share during the second quarter, according to Thomson Financial.
Investors bid up Adobe shares by 4.6% to $42.62 per share in early afternoon trading on the Nasdaq Mar. 21.