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Adobe Systems Incorporated Message Board

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  • Sarcastic_investor Sarcastic_investor Dec 20, 2008 8:41 AM Flag

    ADBE should lower prices on Dreamweaver

    This analyst mentioned the fact that the home buyer isn't buying.

    "Robert W. Baird analyst Steven M. Ashley noted that Adobe's weakness came mainly from its Creative Solutions business, which is responsible for the Creative Suite package, and mostly from the consumer segment."

    Of course the home buyer isn't buying. We are in a deep recession that could get worse. 2009 is when companies stop buying. That's when the crap will hit the fan for software companies like ADBE. Also, CS4 isn't a must have upgrade. So many companies will stick to CS3 while the economic future remains uncertain. We are in a deflationary world. Their prices are just too high for the times. $400 for Dreamweaver??? I don't think so. The market has spoken.

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      Shares of Adobe performed so well over the last 10 years that the company’s value soared to the point of putting off many potential suitors. But a recession, troubled financial markets and slowing growth have helped erase more than half of Adobe’s value, raising questions about how digestible the company may look to any numbers of larger entities with vast cash stockpiles.

      Plenty of companies have had their share price shredded over the last few months, and I am not claiming any special knowledge about Adobe or playing off rumors flowing through Silicon Valley. It’s just that Adobe’s rather remarkable stock market success had priced it out of the clutches of all but a handful of companies. That’s not the case anymore, and Adobe stands as one of the most attractive technology companies out there, given its market dominance, continued growth and crucial position in Internet media and graphics overall.

      From August 1998 to August 2008, Adobe was a 10-bagger, increasing its share value by more than 1,000 percent. At more than $40 a share in August 2008, Adobe was valued at about $23 billion, making it one of the largest software makers on the planet.

      In the last three months, Adobe’s shares have tumbled to around $21 a share, leaving it with a value of more than $11.5 billion.

      On Tuesday, Adobe reported fourth quarter net income of $246 million, which compares to $222 million posted in the same period last year. The maker of graphics software also reported earnings of 46 cents, an 8-cent year-over-year increase and revenue of $915 million versus $911 million in the previous fourth quarter.

      Adobe investors are accustomed to double-digit revenue growth, but exhibited only a mild reaction to the flat results on Wednesday, knocking close to 3 percent off Adobe’s share price. Any growth from a technology company is appreciated given the current economic circumstances.

      Adobe prides itself on remaining independent and fending off repeated challenges from Microsoft and a host of other competitors over the years. Today, the company sits at the heart of Internet publishing and graphic design thanks to its Photoshop, Illustrator and Flash products. And it’s exactly those products that could make Adobe an attractive acquisition.

      Microsoft, Apple and Hewlett-Packard are just some of the companies that could handle an Adobe purchase, although Microsoft could likely find the regulatory hurdles higher than the other companies. All three of the companies mentioned could use Adobe’s products to extend their publishing reach and Internet influence.

      Executives at Adobe say 2009 should remain a challenge. And slowed growth could leave the company in a very vulnerable spot over the next year, as the big boys plot their moves.

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