Adobe stock cops a big whack

Sam Varghese
Thursday, 23 September 2010 13:05

IT Industry - Market

In an apt demonstration of the manner in which market expectations and forecasts can affect publicly traded companies, Adobe's stock has taken a big hit even though the company returned good results for the third quarter.

The stock fell about 19 per cent on the US market yesterday, following announcement of third-quarter revenue of $US990.3 million.

This compared to revenue of $US697.5 million for the third quarter of 2009 and $US943 million for the second quarter of 2010.

Adobe had been expected to report revenue of about $US1.03 billion.

Additionally, the company's forecast that it was targeting revenue between $US950 million and $US1 billion in the fourth quarter, roughly the same as it had in the third quarter, led to the stock falling to $US26.67, a fall of $US6.27.

The volume of trading was high, with 108.7 million shares changing hands, about eight-and-a-half times the average volume traded.

Adobe's Creative Suite product has not been doing as well as expected, with sales of version 4 lagging. There are also doubts whether an 18-24 month upgrade cycle will be supported by customers.

The company said its GAAP net profit was $US230.1 million. In the corresponding quarter of 2009, the figure was $136.0 million while in the second quarter of 2010 the profit recorded was $US148.6 million.