Better than expected earnings
Trefis price updated to $40.34 from $41.84 based on 3 changes:
(1) Cash Balance updated from $2.7 billion to $2.6 billion
(2) Shares outstanding updated from 524 million to 532 million
(3) LiveCycle Licenses Sold forecast decreased for 2009 due to continued weak demand from corporate customers
Adobe, commonly known for its widely distributed free Acrobat PDF Reader, makes money primarily by serving “creative professionals” like graphic designers and photographers, with software like Photoshop, Dreamweaver, Flash and InDesign. The company reported better than expected earnings but indicated declines in sales of its Creative Suite 4 (CS4) product which includes Photoshop, Dreamweaver, Flash Professional and InDesign products. This was expected due to the cyclical nature of Adobe’s CS products and was already factored into the Trefis price.
Adobe’s LiveCycle product, however, has not done as well as expected and we have revised down our 2009 forecast for LiveCycle Licenses Sold. LiveCycle software helps businesses create interactive online customer forms to reduce paper communication and speed up application processes. For example, LiveCycle software is used in account opening applications, mortgage applications, loan approvals and claims processing. Many of the buyers of LiveCycle software are corporate IT departments which have cut back spending (forced by budget cuts) due to the recessionary environment.
You can find additional detail on Adobe’s earnings and our update here (scroll down to comments section).
$1.8 billion acquisition of Omniture
Concurrent with earnings, Adobe announced the acquisition of Omniture, which makes money by selling web analytics software to help websites monitor the effectiveness of marketing messages. This transaction brings together Adobe’s software tools used to create websites and ads with Omniture’s analytics software for content monitoring. Adobe-Omniture together will be able to offer customers an integrated design and analytics software package. Such software will make it easier to integrate measurement during the content creation process which leads to optimized measurement once content goes live. Better measurements then lead to more effective content improvements.
We have not yet incorporated the Omniture acquisition into the Trefis analysis of Adobe; however we plan to do so soon. You can find additional detail on the Omniture acquisition here (scroll down to comments section).
