Thursday, June 16, 2011

Adobe Systems (NASDAQ: ADBE): Q2 Earnings Preview 2011

Adobe Systems Inc. (NASDAQ: ADBE) is scheduled to release its fiscal seocnd-quarter earnings after the closing bell on Tuesday, June 21, 2011. Analysts, on average, expect the company to report earnings of 51 cents per share on revenue of $994.79 million. In the year ago period, the company reported earnings of 44 cents per share on revenue of $943.04 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-first quarter, the San Jose, California-based company's net income was $234.6 million, or 46 cents per share, compared to $127.2 million, or 24 cents per share, in the year-ago quarter. On an adjusted basis, the company earned 58 cents per share in the first quarter. Revenue jumped 20% to $1.03 billion from $858.70 million in the same quarter last year. Analysts, on average, expected the company to report earnings of 57 per share on revenue of $1.03 billion. 

At its last earnings call in March, Adobe forecast second quarter revenue of $970 million to $1.02 billion, GAAP earnings of 33 cents to 40 cents per share and non-GAAP of 47 cents to 54 cents per share. Operating margin for the second quarter is expected to be 24.5% to 27.5% on GAAP basis and 34% to 36% on a non-GAAP basis. "Given the uncertain business environment in Japan, we are being prudent and have reduced our revenue expectation for our second quarter by $50 million — or roughly one-third of our original Q2 revenue expectation for Japan," said Mark Garrett, executive vice president and CFO of Adobe.

The company recently unveiled the new Creative Suite 5.5 product line, targeting popular and emerging smartphone and tablet platforms. This product family offers significant advances to HTML5, Flash authoring, digital publishing and video tools.

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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