September 16th, 2008
Adobe: Sizing up Creative Suite 4
Adobe reports its third quarter earnings after the closing bell Tuesday and analysts will be looking forward to comments about its flagship Creative Suite 4, which will be unveiled Sept. 23.
Wall Street is expecting earnings of 46 cents a share excluding charges and 36 cents a share including items. Revenue is expected to be $876 million, according to Thomson Reuters.
In many respects, analysts aren’t expecting much from Adobe’s quarter due to a stronger dollar and a weak U.S. economy. Meanwhile, the second quarter was strong and Adobe has a tough act to follow. Cowen and Company analyst Walter Pritchard says in a research note that Adobe’s outlook for Creative Suite 4 (CS4), will be muted amid macroeconomic challenges. Creative Suite includes Adobe Illustrator, Photoshop, Flash and other design tools.
Morgan Stanley analyst Adam Holt writes:
While CS4 will likely not feature any net new apps, CS4 includes numerous productivity improvements, tighter integration between the Macromedia apps and legacy CS apps and substantially improved capabilities in sound and video editing.
The big question for CS4 is whether Adobe will be able to raise prices. If Adobe can raise prices on its suite Wall Street is likely to cheer–although all of you designers out there won’t. Other odds and ends for Adobe’s quarter:
- Mobile and device revenue is expected to decline in the third quarter from the second due to falling royalty payments. ColdFusion and FlexBuilder, which are tools for Adobe’s AIR platform, are expected to cushion the blow.
- The early reviews and feedback on Acrobat 9 have been positive. Holt reckons that Acrobat 9 should see more upgrade action than its predecessor.
- The currency impact will be an issue. About 39 percent of Adobe’s revenue comes from Europe and the euro has been declining relative to the dollar. That fact could translate into a currency headwind for Adobe in the fourth quarter.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
For daily updates, follow Larry on Twitter.
Subscribe to Between the Lines via Email alerts or RSS.
