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Adobe posts lower 1Q profit, but exceeds expectations

Published March 23, 2010 7:18 pm

This is an archived article that was published on sltrib.com in 2010, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Adobe Systems Inc. said Tuesday that fiscal first-quarter earnings declined on higher expenses, but sales climbed as demand for its design and publishing software improved with the stabilizing economy.

The results surpassed Wall Street's expectations, and Adobe also gave a strong forecast for the current quarter, thanks to the better economy and a key product upgrade Adobe said Tuesday it would launch by early June. Its shares rose in after-hours trading.

Adobe, which recently acquired Orem-based Omniture, earned $127.2 million, or 24 cents per share, in the three months that ended March 5. That is down 19 percent from a year earlier. Omniture provides software tools for analyzing visits to Web sites.

Excluding items such as stock compensation costs, Adobe earned 40 cents per share in the latest quarter, above the 37 cents that analysts polled by Thomson Reuters were expecting.

Revenue rose 9 percent to $858.7 million, also surpassing analysts' expectations. Operating costs increased 18 percent to $592.5 million as research, development, marketing and other expenses grew.

The bulk of Adobe's revenue comes from Creative Suite, its flagship software package targeting professional designers and Web developers. The company launched the most recent version, Creative Suite 4, in the fall of 2008, just as the financial crisis hit.

This squeezed sales of the product, but analysts widely expect the next version to do better, boosted by pent-up demand from businesses that may not have upgraded to CS4.