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Adobe issues disappointing outlook, will cut jobs

Press release from the issuing company

SAN JOSE, Calif. — Dec. 3, 2008 — Adobe Systems Incorporated (Nasdaq:ADBE) today provided preliminary financial results for its fourth quarter ended Nov. 28, 2008.

Based on preliminary Q4 financial information, Adobe believes it will achieve fourth quarter fiscal 2008 revenue in the range of $912 million to $915 million. The Company also believes it will achieve GAAP diluted earnings per share in the range of $0.45 to $0.46, and non-GAAP diluted earnings per share in the range of $0.59 to $0.60. The GAAP and non-GAAP diluted earnings per share estimates include two favorable tax items: a current quarter catch-up related to the reinstatement of the U.S. research and development credit and a favorable tax court settlement, which increased Q4 estimated GAAP and non-GAAP diluted earnings per share ranges by approximately $0.05.

Adobe’s fourth quarter revenue target range was $925 million to $955 million, and its fourth quarter diluted earnings per share target ranges were $0.39 to $0.41 on a GAAP basis, and $0.51 to $0.53 on a non-GAAP basis. A reconciliation of preliminary GAAP and non-GAAP financial results is available later in this press release.

“The global economic crisis significantly impacted our revenue during the fourth quarter,” said Shantanu Narayen, president and chief executive officer. “We have taken action to reduce our operating costs and fine-tune the focus of our resources on key strategic priorities.”

The Company cited weaker-than-expected demand for its new Creative Suite 4 family of products that began shipping in Q4 in North America and Europe as the main cause for the shortfall in fourth quarter revenue.

Adobe also announced the implementation of a restructuring program, and has taken steps to reduce its headcount by approximately 600 full-time positions globally. The restructuring will result in anticipated pre-tax charges totaling approximately $44 million to $50 million. The Company expects approximately $28 million to $30 million of the restructuring charges to be recorded in the fourth quarter of fiscal year 2008.

Adobe also provided initial financial targets for its first quarter of fiscal year 2009. The Company stated it is targeting Q1 revenue of $800 million to $850 million. In addition, the Company said it is targeting a Q1 GAAP operating margin range of 26 percent to 28 percent, and a Q1 non-GAAP operating margin range of 37 percent to 38 percent. A reconciliation of GAAP and non-GAAP financial targets is available later in this press release.

The Company will discuss its quarterly and full-year results as well as its Q1 financial targets and the restructuring program on its Q4 and fiscal year 2008 earnings conference call that is scheduled for Dec. 16, 2008.