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Adobe Systems Inc. Message Board

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  • hageneriksson hageneriksson Sep 19, 2012 6:36 PM Flag


    Initial success is running far above the companys' expectations so far which means the company will recognize lower upfront revenues going forward but instead getting a recurring monthly or annually revenue stream. The impact of this transition to next quarters revenue forecast will be close to $100 mln so this explains the downward guidance entirely.

    With the company being in the very initial stages of the transition I wouldn't declare victory for Adobe yet but things are looking not too bad at this point in time.

    Analysts on the call mostly took a neutral stance, too. So I wouldn't expect any surprises tomorrow morning. ADBE bears will issue some cautious commentary while ADBE bulls will tell you to take advantage of any guidance driven weakness in the stock. At the end of the day the stock price should be pretty much unchanged as the majority of the new subscription based offerings will roll out later this year and in 2013.

    If forced to take action I would prefer the long side at this time as management was pretty upbeat on the call and the transition of the business model is running smoothly so far.

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    • If subscriptions were so strong, wouldn't this show up in deferred revenue? Why is deferred revenue down big instead of up?

      • 2 Replies to kerrsmacker
      • they just said initial response is good against what they expected but that always happen with a new product that does not mean it is sustainable, that also comes into play next year the stock should slide slowly. I won't buy here and wait till under 30.

      • show up in deferred revenue. Here's what the company said on the call regarding deferred revenues:

        Our ending deferred revenue balance decreased by $32.5 million to $560.3 million. This decrease is typical in the quarter following a major desktop product launch. Free-of-charge upgrade recognition from the CS6 launch builds short-term deferred revenue during the launch quarter, and is recognized as revenue in the quarter following the launch, causing the decline.
        In addition, our Digital Marketing business invoices customers on the first day of each calendar month and the timing relative to our quarter end caused some of the sequential decline. As a reminder, Creative Cloud subscriptions are billed monthly, and are essentially not reflected in deferred revenue on the balance sheet.

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