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
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.
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
Please see the Lexmark announcement of a color
ink jet for
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.
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
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
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
I have one more question if you don't
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
Please explain if you can, I am totally
Thanks in advance,
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I've read quite a few books on trading stocks and
options. Two that I would recommend for starters
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).
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.
addition, I would like to add a couple of words of
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).
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
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
Hope this helps,
The best book that I have seen is "Options as a
Strategic Investment" by Lawrence McMillan.
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.
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.
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
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:-)