Investors Flip for Adobe after Earnings Boost

New software releases could fueling further appreciation for the stock, says one analyst

Investors bid up stock in Adobe Systems Incorporated (ADBE), after the San Jose, Calif.-based software developer reported stronger than expected third quarter results on Sept. 15.

Adobe's stock price surged 11.3% to $37.46 in early trading on the New York Stock Exchange.

Adobe had revenue of $602.2 million, compared to $487.0 million reported for the third quarter of fiscal 2005. Net income was $94.4 million for the third quarter of fiscal 2006, compared to $144.9 million reported in the third quarter of fiscal 2005. The third quarter results reflect the company's acquisition of the software company Macromedia in December 2005.

"With new products launching this quarter, our outlook for the remainder of the year remains positive," Chief Executive Officer Bruce R. Chizen said in a press release.

Adobe's Acrobat 8 ships in November, followed by Creative Suite 3 in the second quarter. Both are likely to be major new releases capable of reinvigorating growth and fueling further appreciation for stock, according to Goldman Sachs analyst Rick Sherlund. He also noted that Macromedia's products are being integrated with Adobe's, providing complementary products that appeal to a broader market. He added the stock to his list as a "buy."