Adobe Profit Beats Forecasts but Outlook Disappoints

Adobe Systems Inc. (ADBE) Thursday reported a 37-percent rise in quarterly profit on demand for its document-sharing software, but its stock fell after the company provided an outlook that was not as aggressive as recent quarters.

The company, whose shares fell about 6 percent after hours, said second-quarter net income rose to $149.8 million, or 29 cents per share, from $109.4 million, or 22 cents a share, a year earlier.

Total revenue increased to $496 million from $410.1 million a year earlier, the San Jose, Calif.-based company saidations, but the outlook was conservative because Adobe was headed into its seasonally weaker third quarter.

"The quarter looked fine to me ... I think (others) were looking for something more aggressive," said Adams Harkness analyst Steven Frankel, of the share decline.

Analysts had expected second-quarter earnings of 27 cents per share on revenue of $491.5 million, according to Reuters Estimates. Fifteen of the 21 analysts who cover Adobe rate the company with a "buy" or "outperform" rating.

For the third quarter of fiscal 2005, Adobe forecast revenue of $470 million to $490 million, representing about 16 percent to 21 percent year-over-year growth, and earnings of 25 cents to 27 cents per share.

Analysts were expecting third quarter revenue of $484.5 million on earnings of 25 cents to 26 cents per share.

Adobe, whose PDF software is the de facto standard for sharing documents electronically, announced in April it would buy San Francisco-based Macromedia for about $3.4 billion in stock.

The company also mentioned in its earnings statement that earlier this week a disgruntled shareholder sued the company's board to try to stop Adobe from buying Macromedia (search) after that company recently restated earnings results. The news was reported Wednesday.

The suit accuses the board, including Chief Executive Bruce Chizen, of breaching its duty to shareholders to renegotiate or drop the Macromedia purchase after Macromedia's stock fell. The suit was filed by stockholder Steve Staehr in state court in Santa Clara, Calif. Staehr has filed previous suits against other companies.

Following the results, Adobe shares lost 6.3 percent to trade at $30.48 on the Inet electronic brokerage system. Ahead of the earnings report, the shares had risen about 1.3 percent to close at $32.41 on Nasdaq.