Adobe Systems reports lower 1st-quarter profit as costs climb, but sales improve

Tuesday, March 23, 2010

Adobe Systems posts lower 1Q profit as costs grow

SAN JOSE, Calif. — 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 economy.

Adobe said it earned $127.2 million, or 24 cents per share, during the three months that ended March 5. That is down 19 percent from a year earlier.

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 2 percent to $858.7 million, surpassing analysts’ expectations.

Adobe, which is based in San Jose, Calif., is forecasting second-quarter revenue of $875 million to $925 million, above Wall Street’s predictions.

The bulk of Adobe’s revenue comes from Creative Suite, its flagship software package targeting professional designers and 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.

Adobe has not said when it plans to launch Creative Suite 5, but analysts expect it to do so in the first half of the year.

In extended trading Tuesday after the results were announced, Adobe shares gained $1.57, or 4.5 percent, to $36.79. Earlier, it closed up 27 cents at $35.22.

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