Adobe issues warning about first-quarter revenue

Corrected at 3:45 p.m. PST: An earlier version of this story incorrectly reported that Adobe announced it will miss both its revenue and profit forecasts for the first quarter. The company said it will miss its previous revenue forecast.

Faced with growing weakness in it business, Adobe Systems announced Wednesday it will miss its previous revenue forecast. But, the software maker said it expects to meet its profit forecast thanks to cost-cutting measures.

On Wednesday, Adobe shares were up nearly 9 percent in after-hours trading to $17.75. During the regular trading session, Adobe closed up 2 percent to end the day at $16.32 a share.

Adobe, which will report its first-quarter results on March 17, said it anticipates posting revenue of $783 million to $786 million in the quarter, compared with its previous forecast of $800 million to $850 million.

"Despite worsening market conditions, we were able to manage expenses to deliver earnings and margin results within the target ranges we provided at the outset of the quarter," Shantanu Nagayen, Adobe chief executive, said in a statement.

During the quarter, Adobe expects to release an operating profit of 30 cents a share, based on a GAAP accounting basis. That performance is on the low end of its previous forecast of 30 cents to 35 cents a share.

Although a number of companies are shying away from offering a forecast for the coming quarter, Adobe stepped up to the plate to deliver its forecast.

Adobe expects to see a further deterioration in its revenue to $675 million to $725 million in the second quarter, the company noted.

[Mr. Dee]

Why do you think this is happening? Because Graphics Designers are realizing that older versions of the Company's software is good enough, Photoshop CS4 which is the flagship software from Adobe doesn't anything compelling. I am sure Designers are looking to alternatives too from Corel with Painter and Microsoft's Expression. Also, Adobe still refuses to solve fundamental problems with the Creative suite, its slow! I installed the Master Collection trial the other day and the thing too about nearly an hour to install. Even Vista and Windows 7 install faster. I think another factor in sales equation is partly Adobe's fault again, they announced that Photoshop CS4 would not be 64 bit for Mac, but it would be for Windows and Mac users would have to wait until CS5. A lot of Photoshop users are on the Mac, they are thinking to themselves, why am I really going to burn $2,500 on Master Collection CS4 knowing CS5 is not too far in the future?

[martin1212]

Nah, far more likely is that it is happening because of the current economic situation. It is not that users suddenly decided the new versions don't offer compelling upgrades, it is just that nobody wants to spend any money right now. Lots of software companies are suffering right now, in fact, relatively, Adobe is doing pretty well.

If what you say is true then we should expect to see Corel having a blowout quarter from all the migrations from Photoshop. Somehow I'm not holding my breath...

[Perry_Clease]

I bought CS4 late last year, got an "up sell" license from CS2. I can't comment on how it compares to CS3 because I skipped that version, but overall I like it better than CS2. Programs certainly seem to load faster.

[ckurowic]

Always the expert, Mr. Dee. Yeah.

[drbyte]

Bloated overpriced software. Not saying it's bad, just bloated, and not really priced to be a consumer impulse purchase.

I got rid of Acrobat and Acrobat reader and my system is happier because of it. PrimoPdf and Foxit reader do the same and they take up about 20MB of installed space vs 880MB of space Acrobat took. For photo editing, CS2 does everything I need it to do. I could probally get by with GIMP but there are plug in's that are only available for use with photoshop.

[ckurowic]

Lets not forget that Adobe acrobat reader is currently BANNED on all government systems due to a security hole. NICE