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http://www.insanely-great.com/news.php?id=538
Adobe Warning Bodes Ill for PC Industry Recovery
By Remy Davison, Insanely Great Mac
June 14th 2002
Minor revenue shortfall, but stock goes into freefall.
Adobe Systems last night announced a drop in profits of 12% for its fiscal second
quarter, while simultaneously issuing a warning that its third quarter revenues would
not meet analysts'' forecasts.
The world''s second-biggest software publisher, which has released a raft of Mac OS X
native products over the last few months, saw its stock fall to $33.50, its lowest
level in four months.
Revenue forecasts from Adobe are only down slightly, from $1.3 billion to $1.2
billion. Analysts quoted in Reuters'' report argue that the fall in revenue is very
little in real terms, and that markets may well have overreacted by driving Adobe''s
stock down.
In the breakdown of the data on software titles issued by Adobe, Acrobat sales have
flattened, while Photoshop revenues were healthy, given the release of Photoshop for
Mac OS X which would have added to the bottom line. Notably, Photoshop experienced its
second-best quarter in the company''s history.
Acrobat, however, which accounts for around one third of revenue, has not experienced
sales growth recently, and demand for the product is expected to remain flat during
the third quarter.
Adobe CEO Bruce Chizen did not forecast a global economic recovery, but he did not see
conditions growing any worse at present. However, he said to Reuters that he did not
foresee any indication of an economic upswing in the short term.
Analysis: As ever, Adobe realizes, but rarely acknowledges, its dependence upon the
Mac market: its key industries, encompassing illustrators, photo editors, publishers
and designers, among many others. Mac OS X was clearly responsible for a sizeable
chunk of these revenues, and without OS X versions, Adobe would be in deep, deep
trouble. PDF/Acrobat is clearly a critical part of Adobe''s market, but Acrobat is
still limited in what it can do and Adobe needs to make Acrobat upgrades compelling if
it is to get customers to move up to Acrobat. It has to become as indispensible as
Photoshop. And Adobe''s got to do this - before Microsoft decide to own that market as
well. In 1996, Gates said, "Where is our competitor to Acrobat?" And, in time, Mr.
Chizen, Microsoft will always come to get you.
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