Adobe posts profit shortfall

Software maker Adobe reported more than a 50% drop in net income for the fourth quarter of 2001, compared with the same quarter...

Software maker Adobe reported more than a 50% drop in net income for the fourth quarter of 2001, compared with the same quarter last year.

The company blamed the shortfall on weak demand for its publishing products, as companies across the world reduce spending on software for creative marketing, such as Adobe's Photoshop editing software.

Net income for the fourth quarter ending 20 November totalled $34.3m (£24m), or $0.14 a share. This is down from net income of $79.2m and earnings per share of $0.31 in the same period last year.

Excluding special one-off charges, Adobe reported income of $67.9m, which is down from about $127m in 2000. Adjusting for those charges, earnings were $0.20 per share, compared with $0.34 per share last year. Revenue for the fourth quarter totalled $264.5m, compared with $355.2m in the fourth quarter last year.

Analysts polled by Thomson Financial/First Call had predicted that Adobe would report earnings per share of $0.21, excluding one-time charges, and revenue of about $279m.

Adobe chief executive Bruce Chizen said he was "disappointed" that revenue came in below the company's target range, but was satisfied with the firm's efforts during the quarter. "We have maintained or gained market share in our major markets," he said.

"The weak global economy is having a major impact on our business," Chizen added. "Until corporations begin to spend more marketing dollars, this negative impact on creative professionals and Adobe's products will remain."

During the fourth quarter, Adobe laid off 247 employees and reported a restructuring charge of $12.1m, which was reflected in its fourth-quarter results. The company also expanded its product offering with new versions of its publishing software for Apple's Mac OS X operating system.

Abobe announced last week that it had acquired Fotiva, which makes Web-based software for editing and sharing digital images over the Internet. In addition to developing new network publishing software, Adobe said it would release new software based on technology acquired from Fotiva.

For the full year, Adobe reported revenue of $1.23bn, compared with $1.27bn in 2000. Full-year net income was $205.6m, compared with $287.8m.

Adobe said it expects revenue for the first quarter of 2002 to come in between $265m and $280m. Earnings per share in the first quarter will be $0.20-$0.22 per share, the company predicted. Analysts had expected Adobe to report adjusted earnings per share of $0.23 on revenue of $292m.

Separately, Dmitry Sklyarov - the Russian programmer who was arrested in July for creating a program that allowed users to hack Adobe's eBook Reader software - was set free on 13 December by the US Government in exchange for agreeing to testify against his company for allegedly infringing on US copyright law.

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