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Adobe Systems (ADBE) 1Q profit rises on strong software demand

Shares of Adobe Systems Inc. (NASDAQ: ADBE) have been soaring after the company reported yesterday after the market closed that its first-quarter profit jumped 52%, helped by strong demand for its design tools. The software maker also issued a stronger-than-expected sales and earnings outlook, despite fears of an economic slowdown.

For the quarter, Adobe Systems reported that its profit climbed to $219.4 million, or 38 cents a share, boosted by strong sales from its software tools like Photoshop, Illustrator, Dreamweaver and Acrobat. Excluding special items, the company's earnings came in at 48 cents a share, topping analysts' estimations for quarterly earnings of 45 cents a share.

Adobe Systems also announced a respectable 37% growth in revenues, to $890.4 million, up from $649.4 million a year earlier. Revenue during the period was helped by a 57% increase in its Creative Suite 3 solutions sales which rose up to $543.5 million in the quarter. Analysts, on average, were expecting the company show $876 million in revenue, according to Thomson Financial.

Looking ahead, the software maker said it expects a growth of 13 for its 2008 revenue as it plans to continue to make significant investments in research and development. Adobe also forecast second quarter earnings in a range of 45 and 47 cents a share with revenue between $855 million and $885 million. Analysts predicted second-quarter earnings of 44 cents a share on revenue of $875 million.

Adobe's surprising earnings and its optimistic outlook impressed traders, who pushed the stock higher over 13%.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

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Last updated: May 17, 2008: 08:12 AM

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