Adobe has reached a level of saturation. It cannot grow so it invented the cloud. They blew the pricing while sitting on the cloud they forgot that people on earth need to buy cars rent etc. Adobe want us to spend $600 a year on subscriptions. 1 mil are trying the cloud at a range from 20per month student and 30 per month for all others. They want to move from boxed versions and upgrades because they know that they are all out of tricks. The upgrades are really just updates, The CEO and board see this and are rushing to get you on the cloud asap. As i see it they blew the pricing people will jump off the cloud!
Sentiment: Strong Sell
Revenue is down in the short term due to all the new digital subscriptions. There is another 2 million using their free subscriptions up from 1 million last quarter! Stunning number! 92% of all new subscriptions are annual up from 88% Another stunning number! Paid creative suite subscriptions up 50% in past 90 days! Stunning! Subscriptions give Adobe clarity in what revenues and earnings will be going forward and are lot more profitable than boxed software which allowed or massive pirating and huge up front fees for customers. The lower price tag will drive new sales and profits will soar in 2014! This train is leaving the station! All Aboard!:) Cloud software services is the future and Adobe is nailing it HARD!:)
SNPS (Synopsis) switched to a subscription model a few years back. SNPS was $35 in 2000, $35 in 2004 and $35 in 2013. ADBE revenue and profit down from last year and next year will be flat or lower according to guidance. When will the actual profits grow to justify the current PE of almost 30? ADBE fundamentals do not support such a high valuation--IMHO.
Revenue down, profits down. Same for next quarter. ADBE beat earnings targets that were lowered during the prior months. How can the stock price go up on this news?
During remarks to CNBC just after the report, CEO Shantanu Narayen said the company sees Q2 revenue in a range of $975 million to $1.03 billion, and EPS in a range of 29 cents to 35 cents. That is below the consensus for $1.02 billion and 34 cents.
For the full year, the company sees revenue of “about $4.1 billion,” and EPS of $1.45. That compares to consensus for $4.1 billion and $1.40.
Next year not as strong as last year:
In 2012, revenue was $4.4B and profit was $1.65 per share. In other words, the business is projected to weaken.