CS3, Acrobat push Adobe to strong finish for fiscal 2007

Adobe reported a strong finish to the year, with both revenue and profit for its fourth quarter up more than 20 percent.

Software maker, Adobe, reported a strong financial finish to its 2007 fiscal year, with revenue up 23 per cent for the year and 34 per cent for the fourth quarter on sales of its Creative Suite 3 (CS3) and Acrobat software, the company said Monday.

For its fourth quarter ended Nov. 30, Adobe reported record revenue for a three-month period of $US911.2 million, compared with $682.2 million for the same time period last year. Revenue beat estimates from analysts polled by Thomson First Call, who were expecting the company to bring in $837 million in the quarter.

For the fiscal year ended at the same time, Adobe reported revenue of $US3.16 billion, also a record for the company, compared with $2.58 billion last year. Adobe's net income for the quarter was $222.2 million, a 21 per cent increase over the $183.2 million reported in the fourth quarter of fiscal 2006. For the year, net income was up 43 per cent at $723.8 million, compared with $505.8 million in fiscal 2006.

Diluted earnings per share (EPS) for the fourth quarter of fiscal 2007 were $0.38, slightly above the company's own range of $0.35 to $0.37, and a 27 per cent increase over diluted EPS of $0.30 for the same period last year. Diluted EPS for the year was $1.21, a 46 per cent increase over EPS of $0.83 in 2006.

A strong end to fiscal 2007 is fitting for what turned out to be a banner year for the publishing and design software vendor. The company released CS3, a combination of its own graphics creation products and Web design and multimedia tools that it acquired from Macromedia. It is the first real blend of the two companies' complementary technologies in one suite.

CS3 so far has been well-received by the creative Web and production design community that has been loyal to both Adobe and the former Macromedia for years, making Adobe the leader among those customers. However, this position also inspired more competition in 2007, most notably from software giant Microsoft, which came out with its Expression suite to rival CS3, as well as new cross-browser software called Silverlight to compete with Adobe's ubiquitous Flash multimedia technology.

2007 also saw longtime Adobe CEO, Bruce Chizen, step down at the end of the fiscal year. He made the move as part of a planned transition and so he could pursue other career endeavors. Former president and COO, Shantanu Narayen, is now chairman and CEO of the company.

Adobe on Monday also provided estimates for its first quarter of fiscal 2008, which ends in February. The company expects revenue between $855 million and $885 million and EPS between $0.34 and $0.36 for the quarter. For fiscal 2008, the company reiterated its target annual revenue growth rate of about 13 per cent, which it previously announced.

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Elizabeth Montalbano

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