Adobe Announces Buy Back, Sharpens Focus on a SaaS Model

by Trefis Team
+26.90%
Upside
517
Market
656
Trefis
ADBE
Adobe
Rate   |   votes   |   Share

Adobe (NASDAQ:ADBE) announced that its Board of Directors has approved a stock repurchase program up to $2 billion in common stock which will be executed through 2015. This is following up on another repurchase program that ended in 2012 to the tune of $1.6 billion. [1]

See our complete analysis of Adobe here

Focus On A SaaS Business Model

Adobe is yet another company to take a plunge into the cloud computing model. Its most popular cloud offering is the Adobe® Creative Cloud™, a subscription based model that benefits both the provider of the software as well as the user. The user does not have to buy a software package just to use a few features which reduces cost to the user. This drives up volume for the provider as well as enables better control and version maintenance.

Though the current offerings on the cloud are not as comprehensive as the Creative Suite line of products, it is likely to improve as demand grows. Short term enterprise license revenue however is bound to drop as subscriptions cannibalize license revenues.

HTML5, Adapting Software For Tablets Likely To Drive Growth

Adobe is backing HTML5 as it quickly becomes the standard for mobile content deployment of its products.((Aggressively Contribute to HTML5, Adobe Blogs, November 9, 2011)) It is in the process of retooling all its software to work on touchscreen interfaces such as tablets and mobiles and recently announced Photoshop Touch for the iPad2. [2] This shows a growing focus on the tablet and mobile space. By enabling value add services such as the Creative Cloud as a subscription service, it can tap into the Android and Apple app markets and this is expected to become a major source of revenue for Adobe.

We currently have a $33.88 Trefis Price Estimate for Adobe which is slightly lower than the current market price of $34.15

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. Adobe to buy back $2 bln in stock by end of FY2015, Marketwatch.com, April 12, 2012 []
  2. Adobe Brings Photoshop Touch For The iPad, Mashable Tech, February 26,2012 []
Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!