March 18, 2008 -- Software maker Adobe Systems Inc. beat Wall Street's expectations in the first quarter with profits that rose 52 percent on continued demand for its design and Acrobat products.
For the three months ended Feb. 29, Adobe posted a profit of $219.4 million, or 38 cents per share, according to an earnings report after the close of trading Tuesday.
That was up from $143.9 million, or 24 cents a share, in the same period a year earlier.
Excluding one-time items, Adobe earned 48 cents per share in the latest quarter. On the same basis, analysts surveyed by Thomson Financial had expected, on average, earnings of 45 cents per share on sales of $875.8 million.
Revenue jumped 37 percent to $890.4 million from $649.4 million in the first quarter a year earlier as booming growth in digital content, from Web sites to online publishing, drove demand for Adobe's products.
But the company did not raise its yearly guidance.
"We are not immune to any type of recession, were one to come, and we are keeping our eye on the U.S. business," Adobe chief financial officer Mark Garrett told The Associated Press in an interview Tuesday. Garrett said the company's diversification in terms of products, geography and customers help it weather economic downturns.
Adobe shares closed Tuesday at $31.88, up $1.09 or 4 percent for the day. In after-hours trading after release of the earnings report, they rose another $1.81 or 5.68 percent to $33.69.
The quarter was the first for Adobe's new chief executive Shantanu Narayen, who took over from former CEO Bruce Chizen in December.
Narayen also responded with confidence to concerns about the wider economy during a conference call with investors.
"We know how to balance between investing for the long-term, as well as dealing with any short-term hiccups that might happen. We get all this data, but frankly in many cases these are the times when the strong companies like Adobe actually get stronger," Narayen said.
The company reiterated that it expects 13 percent revenue growth in 2008 and earnings per share of $1.45 to $1.51. Excluding special items like stock-based compensation, Adobe forecasts earnings per share of $1.86 to $1.92.
Martin Pyykkonen, and analyst with Global Crown Capital, said Adobe may be overly cautious in not raising its guidance.
"They are a conservative company normally and somewhat more so tone-wise right now, which is just basic prudence, nothing that I think they are signaling," Pyykkonen said.
"When you just did 37 in the quarter and you are guiding for 13 for the year, that's one of the things people do get a little frustrated on with Adobe. You know, come on, get real. If you are going to do 13 percent this year, you are basically saying the year is going to fall apart," Pyykkonen said.
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