Adobe offered tech investors some hope of better times to come on Thursday, but the company said conditions remain difficult as economic slowing has spread from the US to Europe.
The maker of desktop publishing software topped earnings expectations for its second quarter, with revenue that climbed 15 per cent. A new version of its popular Acrobat Web software fueled the growth.
But the company's revenue for the next quarter should remain largely unchanged from a year ago. Growth isn't expected to resume until the fourth quarter, when a new version of its InDesign software and several upgrades of its Web publishing products hit the market. Analysts had expected revenue growth in the third quarter, so Wall Street now is likely to lower expectations for the San Jose, California, company.
Still, Adobe's second-quarter results were relatively sanguine given the depth of the sales slowdown that has hit the technology business overall. Income was $61.3 million ($0.25 a share), compared with $65.8 million ($0.26) a year ago. Excluding one-time charges, earnings were $0.34 when analysts had anticipated $0.29.
Revenue for the quarter came in at $344.1 million, up 15 per cent. Sales of Acrobat 5.0 were strong, and expenses rose only 7.3 per cent. The company's blockbuster software, Photoshop, did not see growth. In after-hours trading, Adobe rose two per cent to $39.80 on the respectable performance. The stock had fallen 2.9 per cent in regular trading.
Sales in Europe were worse than the company expected, but sales in Asia were stronger than projected, Chief Financial Officer Murray Demo said in a conference call with investors. The Asian market should soften in the third quarter, helping to keep revenue about flat year to year, he added.
But new products should spark growth in the fourth quarter, he said. Company research has found that design professionals continue to delay purchases of new software because of the sour economy. Now, for the first time, business users are beginning to defer purchases as well, said Adobe CEO Bruce Chizen.