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Adobe Systems Inc. Message Board

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  • onedge953 onedge953 Sep 22, 2010 9:21 AM Flag

    Apple crashed Adobe ....

    Adobe Shares Tumble Premarket On Weak 4Q View, CS5 Sales

    Last Update: 9/22/2010 9:16:44 AM

    By Shara Tibken

    NEW YORK (Dow Jones)--Adobe Systems Inc. (ADBE) shares tumbled in premarket
    trading Wednesday, a day after the software market reported weakening sales of
    its flagship Creative Suite product and issued disappointing fourth-quarter

    Adobe late Tuesday said that it has seen a weakening of sales in its Creative
    Solutions division in the U.S. education market--its largest sector market--and
    in all products in Japan, Adobe's largest geographic market after the U.S. The
    company expects that weakness to continue in the current quarter, causing it to
    issue lackluster sales guidance.

    Investors had been looking for CS5, the most recent iteration of Adobe's popular
    software line, to be as strong as CS3 and boost sales, but they instead were
    disappointed by the results.

    "Although management is still bullish about CS5, we remain cautious about its
    ability to reach CS3 levels and feel Street expectations are overly optimistic,"
    Oppenheimer analyst Brad Reback said.

    Adobe shares recently tumbled 21% to $25.99 in premarket trading, wiping away the
    19% jump in the stock this month. Despite those gains, shares were still down 10%
    this year.

    Shares had been pressured by a strained relationship with Apple Inc. (AAPL) after
    Apple banned Adobe's Flash program from its popular iPhone and iPad. Apple
    reversed course earlier this month, easing its app-developer restrictions to
    allow programs made using Flash, but the tech giant still won't allow iPhone
    users to access Flash-based websites or apps.

    Adobe said Tuesday the short-term impact of the change on product sales "was

    The company forecast fourth-quarter earnings of 48 cents to 54 cents a share on
    revenue of $950 million to $1 billion. Analysts, on average, had estimated 53
    cents and $1.03 billion, respectively, according to a poll by Thomson Reuters.

    The weak guidance led to a host of analyst downgrades, including Credit Suisse
    analyst Philip Winslow, who said he's struggling to identify catalysts for at
    least the next one to two quarters. He lowered his rating to neutral from buy.

    Meanwhile, Jefferies analyst Ross MacMillan noted Adobe appears to be in
    transition from the creative business driving most of its growth to other areas,
    like "enterprise collaboration," driving growth.

    Adobe "has made transitions before, but clearly there is risk and the sheer size
    of the business makes it harder," MacMillan said.

    To be sure, other analysts see the selloff as a buying opportunity. Avian
    Securities analyst Jeff Gaggin said he's not throwing in the towel with Adobe
    shares off about 20%.

    "Whenever there's a product cycle, everyone gets exited about Adobe, but when
    it's over, they throw it out," Gaggin said. "We're trying to be a little bit more
    longer-term oriented about the name."

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