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Adobe meets, warns
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September 19, 2001: 12:20 p.m. ET
Company posts sharp revenue, net income drop; sees weakness ahead
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NEW YORK (CNNfn) - Graphic-design software specialist Adobe Systems Inc. Wednesday posted a fiscal third-quarter profit that fell sharply from the same period last year but was in line with Wall Street's expectations.
At the same time, executives of Adobe lowered their profit target for the current quarter, blaming deteriorating market conditions in Japan and a tough U.S. economic climate market by a slowdown in customer spending.
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 Bruce Chizen, president & CEO of Adobe Systems, chats with CNNfn about 3Q. |
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Before the U.S. markets opened Wednesday, Adobe reported net income of $40.3 million, or 16 cents per share, down from $78.3 million, or 31 cents per share, a year earlier.
Excluding extraordinary charges and other one-time items, San Jose, Calif.-based Adobe earned 28 cents per share, matching analysts' forecasts, according to earnings tracker First Call.
Revenue for the quarter fell to $292.1 million from $328.9 million.
During a teleconference Wednesday morning, executives of Adobe said they expect the company's profit in the current quarter to range between 27 cents and 28 cents per share, where recent expectations had been nearer 31 cents per share.
Business conditions were especially weak in Japan, they said.
"They basically stopped spending," said Murray Demon, Adobe's chief financial officer. "It happened very suddenly and it stayed down very hard and obviously was the big driver in the shortfall we had this quarter.
"We're going to make the assumption that it will continue to be weak," Demo added.
Bruce Chizen, Adobe's chief executive, said software sales to creative professionals, those involved in designing books, newspapers and magazines, were hit hardest, while sales of flagship Acrobat data-sharing tool were strong.
Sales in that division rose 45 percent year-on-year, he said. Meanwhile, sales in its other product divisions, which include the popular Illustrator and Photoshop software products.
Shares of Adobe (ADBE: down $4.95 to $25.15, Research, Estimates) fell more 13 percent in Nasdaq trade Wednesday. Since the beginning of 2001, Adobe's stock has lost more than half its value, underperforming its peers in the Standard & Poor's Software Index by 66 percent. The index is down 21 percent over the same time period.
Adobe had been scheduled to report third-quarter earnings last Thursday but postponed the release following the Sept. 11 terrorist attacks, which claimed thousands of lives, destroyed New York City's World Trade Center and damaged the Pentagon in Washington.
Executives of Adobe also said that their forecast for the current quarter did not include any potential effects from last week's attacks. 
-- from staff and wire reports
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