Adobe Systems (NASDAQ: ADBE), whose tech colleagues include Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), reported earnings for Q4 and the full fiscal year on Tuesday after the bell. The market liked what it saw, sending the shares higher by over 12% in the after-hours trading session.
The numbers do look good. On an adjusted basis, Q4 earnings were $0.60 per share, two pennies better than what Wall Street was expecting. It also represented growth of 22%. For the year, adjusted earnings were $2.07 per share, good for a growth rate of over 28%. Revenues for the year took a nice jump of 13%. Unfortunately, revenues for Q4 didn't move much at all, apparently deciding to take a break by remaining flat.
While the quarter and the year looked more than decent for the most part, the question is, where do we go from here? That flat revenue performance for the quarter might be indicative of a tough year ahead. Also, net cash from operations declined 15%. And here's something else I'll throw out at you: even though the market has pepped up as of late, do you think we're out of the woods yet in terms of the economy? I think not.
Sure, Tuesday's rally was fun to watch, but I don't think I would buy Adobe at these levels for a trade. I'd wait for a pullback. Also, I'd wait for a pullback before entering a long-term position. Incidentally, I do believe in Adobe for the long term. Not only does the company have the name in document solutions (i.e., ever hear of Acrobat and .pdf files?), it also has the great Photoshop software to drive future returns. And don't forget that Adobe has some great movie making products. The company's editing and effects suites provide valuable tools for all the budding Spielbergs out there.
So, I basically feel the same way about Adobe's Q4 report as I did about Adobe's Q3 report. We'll have to wait and see if I'm right or not...
Disclosure: I don't own any company mentioned; positions can change at any time.
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