Adobe's Profits Fall More Than Half

SAN JOSE, Calif. – Publishing software maker Adobe Systems Inc. Thursday said fiscal fourth-quarter net income fell by more than half as revenues came in below estimates amid a sharp fall in software spending after the Sept. 11 attacks.

The San Jose, California-based maker of Photoshop and Illustrator editing and publishing products as well as Acrobat document sharing-software posted net earnings of $34.3 million, or 14 cents a share, down from $79.2 million, or 31 cents, last year.

Revenues fell to $264.5 million from $355.2 million, below the company's own estimates of revenues between $275 million and $285 million.

"Despite lower-than-expected revenues, I am pleased that Adobe's pro forma earnings came within the target range," Bruce Chizen, Adobe's chief executive told analysts on a conference call. The company -- which had previously said October was the worst month in its history following the Sept. 11 air attacks -- said things worsened in November as customers continued to delay spending decisions.

Adobe's shares, which closed the regular trading session on Nasdaq down 3.62 percent, at $30.63, were pushed down 33 cents in after-hours trading to $30.30, according to Instinet.

Adobe said its first-quarter earnings, before charges, would be in the range of 20 cents to 22 cents a share, on revenues in the range of $265 million to $280 million. Analysts, on average, were expecting Adobe to post earnings of 23 cents a share in the quarter, according to Thomson Financial/First Call.

Adobe's pro forma earnings -- excluding a $12.1 million restructuring charge for cutting 8 percent of its staff during the quarter -- were $67.9 million, or 20 cents -- down from $127.5 million or 34 cents a share last year -- in line with the company's lowered guidance of 20 cents to 22 cents a share given in October. The pro forma results also excluded the amortization of goodwill and purchased intangibles, and acquired in-process research and development, Adobe said.

That was the second time Adobe had lowered its fourth-quarter earnings estimate. Prior to that, the company said it expected per-share earnings of 27 cents to 28 cents on revenue of $310 million to $320 million.

Adobe also said it stood by its outlook for the 2002 fiscal year beginning Dec. 1, which calls for the software company to post pro forma earnings of $1.03 a share on total revenue of $1.3 billion.

That forecast was lower than analysts' consensus estimate for earnings of $1.22 a share on total revenue of $1.38 billion. The analysts have since lowered their full-year 2002 estimates to $1.02.

Since the beginning of 2001, Adobe's stock has lost almost half its value, underperforming its peers in the Standard & Poor's Software Index by 60 percent.