Thursday, December 16, 2010

Adobe Systems (NASDAQ: ADBE): Q4 Earnings Preview 2010

Adobe Systems Inc. (NASDAQ: ADBE) is scheduled to release its fiscal fourth-quarter earnings after the closing bell on Monday, December 20, 2010. Analysts, on average, expect the company to report earnings of 52 cents per share on revenue of $988.07 million. In the year ago period, the company posted earnings of 39 cents per share on revenue of $757.28 million.

Adobe Systems Incorporated operates as a diversified software company in the Americas, Europe, the Middle East, Africa, and Asia. It offers a line of creative, business, Web, and mobile software and services used by creative professionals, knowledge workers, consumers, original equipment manufacturers, developers, and enterprises.

In the preceding fiscal-third quarter, the San Jose, California-based company's net income was $230.1 million, or 44 cents a share, compared to $136 million, or 26 cents a share, in the year-ago quarter. On an adjusted basis, the company earned 54 cents a share in the latest quarter. Revenue jumped to $990.3 million from $697.5 million in the same quarter last year. Analysts, on average, expected the company to report earnings of 41 cents per share on revenue of $984.07 million. 

Late in October, the company affirmed its fourth-quarter earnings and revenue outlook, provided on September 1. The company expects fourth-quarter revenue of $950 million to $1 billion, GAAP earnings of $0.35 to $0.41 per share and non-GAAP earnings of 48 cents to 54 cents per share, GAAP operating margin of 27 to 30 percent, and a non-GAAP operating margin of 37 to 38 percent.. The company also stated that it is targeting a revenue growth of 10% for the next year. The company remains committed to its goal of achieving $5 billion in revenue by 2012.

The company's sales have been helped by economic stabilization and recovery in technology market in recent months. Companies are increasing budgets for advertising and marketing materials that can be created with Adobe's software, while worldwide PC sales too have recovered. Adobe released its latest Creative Suite version, CS5, in April 2010. According to Adobe, customer feedback for CS5 continues to be overwhelmingly positive.

However, Adobe Flash is facing an onslaught of up-and-coming alternatives that could threaten the former's dominant status as the defacto rich-media platform online. 

Among other developments, Adobe completed acquisition of Day Software Holdings on October, 29, 2010. The company believes that the acquisition of Day puts it on the path to deliver best in-class customer experience management solutions to enterprise. 

In terms of stock performance, Adobe shares are down nearly 9% since the beginning of the year.

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