By Barbara Ortutay, Technology Writer
NEW YORK (AP) --Adobe Systems Inc., the company behind the popular Photoshop software, posted a decline in fiscal first-quarter profit and sales Tuesday, squeezed by the economic downturn.
However, adjusted earnings slightly exceeded Wall Street’s expectations, and the company’s forecast for the current quarter was in line with analysts’ estimates.
San Jose, Calif.-based Adobe had already warned this month of revenue falling below its previous targets. The recession has slowed sales of Creative Suite 4, the latest version of the software package that brings in the majority of Adobe’s revenue. The product launched last fall, coinciding with the worsening economic turmoil.
For the December-February period, Adobe earned $156.4 million, or 30 cents per share, down 29 percent from $219.4 million, or 38 cents per share, a year earlier.
Excluding one-time items such as stock-options expenses, restructuring charges and investment losses, adjusted earnings totaled 45 cents a share in the latest quarter, beating average analysts’ estimates by a penny.
Revenue declined 12 percent to $786.4 million, roughly in line with analysts’ estimates of $784.2 million, according to a survey by Thomson Reuters.
“While the economy had a clear impact on overall product demand, we were able to proactively align our expenses with our revenue,” said Mark Garrett, chief financial officer, on a conference call with analysts.
Adobe, which said in December it is cutting 600 jobs or 8 percent of its work force, trimmed its operating expenses by 6 percent during the first quarter, to $501.1 million.
Edward Jones analyst Andy Miedler said that while the economy has “clearly taken a toll” on Adobe’s revenue, the company is doing a good job managing its expenses and its overall business, which is helping profits.
“They are investing where they need to but also making the cuts where they need to,” said Miedler, who rates Adobe shares at “Buy.”
Shantanu Narayen, Adobe’s president and chief executive, said the Flash platform is among the areas the company continues to invest in, as use of the product grows beyond PCs to mobile devices, set-top boxes and gaming consoles.
The company’s Creative business, along with Acrobat, continues to represent growth opportunities for Adobe even in the current economy, he added.
Adobe forecast second-quarter earnings of 20 cents to 27 cents per share, or, excluding one-time items, a profit of 31 cents to 38 cents per share. Wall Street’s expectations for a profit of 35 cents per share, excluding items, is within that range.
The company expects revenue between $675 million and $725 million for the quarter, also bracketing analysts’ average forecast of $694.4 million.
“We believe the major market trends driving our business remain intact, and we will continue to focus on innovation and investing in new growth businesses,” Narayen said in a statement.
Google Opens Its Defense In Antitrust Case Alleging Monopoly Over Online Ad Technology
Google opened its defense against allegations that it holds an illegal monopoly on online advertising technology Friday with witness testimony saying the industry is vastly more complex and competitive than portrayed by the federal government.
"The industry has been exceptionally fluid over the last 18 years," said Scott Sheffer, a vice president for global partnerships at Google, the company's first witness at its antitrust trial in federal court in Alexandria.
The Justice Department and a coalition of states contend that Google built and maintained an illegal monopoly over the technology that facilitates the buying and selling of online ads seen by consumers.
Google counters that the government's case improperly focuses on a narrow type of online ads — essentially the rectangular ones that appear on the top and on the right-hand side of a webpage. In its opening statement, Google's lawyers said the Supreme Court has warned judges against taking action when dealing with rapidly emerging technology like what Sheffer described because of the risk of error or unintended consequences.
Google says defining the market so narrowly ignores the competition it faces from social media companies, Amazon, streaming TV providers and others who offer advertisers the means to reach online consumers.
Justice Department lawyers called witnesses to testify for two weeks before resting their case Friday afternoon, detailing the ways that automated ad exchanges conduct auctions in a matter of milliseconds to determine which ads are placed in front of which consumers and how much they cost.
The department contends the auctions are finessed in subtle ways that benefit Google to the exclusion of would-be competitors and in ways that prevent... Read More