Wednesday, March 9, 2011

Adobe Systems (NASDAQ: ADBE): Q1 Earnings Preview 2011

Adobe Systems Inc. (NASDAQ: ADBE) is scheduled to release its fiscal firs-quarter earnings after the closing bell on Tuesday, March 22, 2010. Analysts, on average, expect the company to report earnings of 57 cents per share on revenue of $1.03 billion. In the year ago period, the company reported earnings of 40 cents per share on revenue of $858.70 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-fourth quarter, the San Jose, California-based company's net income was $268.9 million or $0.53 per share, compared to a GAAP net loss of $32.0 million or $0.06 per share for the year-ago quarter.Excluding restructuring charges, stock options expense and other items, non-GAAP net income for the fourth quarter was $285.7 million or $0.56 per share, compared to non-GAAP net income of $206.8 million or $0.39 per share in the prior year quarter. Revenue jumped 33% to a record $1.01 billion from $757.28 million in the same quarter last year. Analysts, on average, expected the company to report earnings of $0.52 per share on revenue of $988.07 million. 

At its last earnings call in December, Adobe forecast revenue of $1.00 billion to $1.05 billion, GAAP earnings of $0.43 to $0.49 per share and non-GAAP earnings of $0.54 to $0.59 per share. GAAP operating margin for the first quarter is expected to be 28% to 29.5%, while non-GAAP operating margin is expected to be 37% to 38%. Adobe continues to target at least 10% revenue growth in fiscal 2011. 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. Apple does not support Flash on its iOS devices, arguing that Adobe's multimedia technology is vulnerable to exploits, consumes too much battery life, and crashes too often. In order to answer Flash critics, Adobe recently released a new tool, codenamed Wallaby, to convert Flash files to HTML5 so that they can run on Apple devices like the iPad and iPhone.

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