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Adobe Systems Incorporated Message Board

  • TraderJim TraderJim Apr 7, 1999 4:00 PM Flag

    Top appears to be in place

    ADBE made a pretty sudden move down thru minor
    support at 55 this AM, and is at 53 3/8 right now, down 2
    3/16. Having also failed on no less than three rally
    attempts to move above 59-60 in the last few days, 60 now
    becomes fairly strong resistance. The high of 59 7/8
    achieved a few days ago will now probably stand for a
    while.

    My target for this correction is 50 minimum, 44-45
    more likely, 40-ish possible but unlikely. The
    timeframe I have for this correction is long however - on
    the order of a month to three months, in sync with an
    intermediate term correction in the S&P and Dow.

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    • Adobe is aware of this cheap inkjet market
      segment. I think they just released PressReady for the
      most commonly used color inkjet printer, which is a
      host rip and is great for producing exceptional color
      output on th cheap color inkjet printers. Please correct
      me if I am wrong, are talking about the samething
      capturing the cheap InkJet printer market. I heard Acrobat
      is going pretty well. I like the WebCapture
      feature.
      -ms

    • Please see the Lexmark announcement of a color
      ink jet for
      $89:

      http://biz.yahoo.com/rf/990428/bzu.html

      For several years now, laser printers have come under
      attack from very cheap (in terms of initial price) ink
      jet printers, that offer color capability as well.
      Most manufacturers have been selling ink jet printers
      at or below their direct manufacturing cost for some
      time, with the goal of achieving profitability in
      consumable sales, which can be lucrative.

      This very
      aggressive move by Lexmark is really out there. Next I
      suppose we'll see free cruises to the Bahamas if you
      agree to take home an ink-jet printer for free. OK, it
      won't get that bad, but you get the
      idea...

      Adobe's Systems Division will need to re-make itself more
      than ever over the next year or two. This is critical
      to Adobe since the gross margin of the systems
      division is far higher than the applications divisions. If
      you look at the contribution to earnings, the systems
      division has a very disproportionate share of the total,
      far in excess of the revenue
      contribution.

      This threat poses a significant problem to Adobe
      earnings over the next few quarters. I know the people
      there are well aware of the issue and are hard at work
      on solutions, but I have concern over what kind of
      performance we will see in the next few quarters.

    • I'm not sure how you are getting $2 B as the cost
      of the buyback.

      5 million shares x $50 = $250
      M, not $2 Billion

      Also note that some of the
      stock buybacks are typically done by selling put
      options, which allows them to buy the stock at a discount,
      since the time value of the option acts to discount the
      purchase price when assigned.

      As I said before
      though this plan is more of a defensive plan for future
      use if and when the need arises. I am not sure that
      all 5 million will ever be purchased, and they may
      not purchase any - there is no obligation to do so.
      Usually ADBE buys back enough stock to avoid dilution
      from employee stock option grants, but is not
      motivated to do more than that.

    • Thank you TraderJim and ChartTracker (Sorry I
      mispronounced your last time) for the books and I have already
      ordered them.
      I have one more question if you don't
      mind?
      How can Adobe buy back 5 million shares in two years?

      Adobe has revenues around 800 million dollars and
      revenues will increase to almost 1.2+ billion dollars at
      15% growth rate in year 2000.
      Let see if the
      stock price goes down to 50/- $ and Adobe start buying
      back the shares. Adobe needs more than 2 billion
      dollars to purchase 5 million stock back. I know Adobe
      has ESPP plan, but I could not comprehend how 2000+
      employees plus revenues can generate that much cash in 2
      year.
      Please explain if you can, I am totally
      baffled.
      Thanks in advance,
      -ms

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    • I've read quite a few books on trading stocks and
      options. Two that I would recommend for starters
      are:

      1) Sure Thing Options Trading - by George Angell.
      This book covers techniques of trading stock and
      commodity options (Don't let the name fool you though,
      there is no such thing as a sure thing in options. The
      book does cover more complicated option trading, such
      as spreads, straddles, and combinations).

      2)
      How To Make Money In Stocks - by William J. O'Neil.
      This book has nothing to do with options, but it is a
      decent starter book for reading stock charts.

      In
      addition, I would like to add a couple of words of
      advise:

      1) Try to keep up with what is going on in the
      general markets. Usually, if the markets are bullish, you
      should stick with bullish positions (purchase long, buy
      calls, or set up bullish spreads). If the markets are
      bearish, you should stick with bearish positions (buy
      puts, or set up bearish spreads).

      2) Watch
      trading volume!!! Usually, extreme volume indicates one
      of four things (Climax Peaks, Climax Troughs,
      Bullish Breakouts, or Bearish Breakdowns). Knowing how to
      read each of these situations correctly is VERY
      profitable.

      3) Experiment a little with a fake portfolio before
      risking your hard earned cash on options. There will be
      plenty of time to make money once you develop a system
      that works for you.

      4) When you are trading
      options (puts or calls without using straddles, or
      spreads), time is not your friend. You are looking for a
      quick profit, and your timing must be
      precise.

      Hope this helps,


      The
      "Tracker"

      2K...13.5K...1M

    • The best book that I have seen is "Options as a
      Strategic Investment" by Lawrence McMillan.

      This is
      the "bible" of options trading strategies, and is
      very detailed and complete. It is very deep and very
      technical, and I guarantee it will make your eyes glaze over
      about half way through. However, it starts out with
      good basic introductory material and basic strategies
      that can get you started.

      Be sure to develop a
      systematic method and discipline for trading before actually
      using real money, and be sure you are very well
      capitalized, because if you don't you will become one of the
      90%+ of all new options traders who ultimately,
      consistently lose money, and who sometimes lose their car,
      their house, and their marraige. Yes, it can be that
      bad, and I even know one options trader who went that
      far personally. The vast majority of investors and
      part-time traders should never venture into options.

    • I agree that Adobe had flat or negative growth in
      the past due to shaky and confused management. I also
      agree that cost cutting and stock buying back helped
      the stock price, but these are not bad things. It
      means that Adobe has realized that they were working on
      projects that were not going to make any money in the
      future and they thought their stock was way too cheap or
      undervalue. I remembered reading a book from a fund Manager
      (I forgot his name, he is a famous guy, now he comes
      in TV commercials?) of Magellan Fund or some other
      fund. He mentioned in his book that, at one time Ford
      was not growing at all and their stock was very low
      but Ford had some cash and started buying back their
      stock. So after couple of years when things settled and
      company came back to track, the stock shoot through the
      roof. I think Adobe is in the same situation now.
      Current management is almost getting there.

      Adobe
      is little bit conservative on the growth at this
      point, because we already know they would exceed the
      earning estimates of this quarter. So if on the top of
      exceeding the estimates of this quarter, if Adobe comes
      with the prediction of better earnings for the next
      quarter, then we will all be very happy.
      Here is
      something I noticed, I might be wrong as usual, if a stock
      is on the rise it really does not care much about
      the TA or other Market conditions. I hope that Adobe
      would not see 50s again at least this year or next
      year.

      OT to TraderJim and ChartTrader:
      I would like to
      learn about the Options trading and like trade to make
      some extra money on the side. Please let me know, if
      there are some good books that teach all the strategies
      or where to start. Please advise me if this is not a
      burden to you guys.
      Thanks in advance:-)
      -ms

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ADBE
94.39+1.93(+2.09%)Jun 29 4:00 PMEDT