Adobe Systems (NASDAQ: ADBE) will get its chance to impress investors this afternoon when it reports its first quarter numbers following the market close.Going into this afternoon's earnings release, the company is expected to show earnings of 44 cents per share for its quarter ending February 27. For the same period last year, the company reported that it had earned 48 cents per share, so we are looking at the company possibly seeing an 8.3% year over year earnings decline.
The current recession has hurt the company's sales of its Creative 4 Suite, which brings together its popular software package of Photoshop Illustrator, Flash, Acrobat and Dreamweaver. While sales have been weak since its launch last fall, most analysts agree that it is going to gain steam in early 2010 and the built up demand will result in much higher sales.
Adobe did get a couple of upgrades earlier this month after issuing its forecast for this afternoon's earnings release. While it did give a revenue estimate that was below what analysts had been expecting to see, it forecast that quarterly profit would fall in line with analyst estimates. In reaction, the stock was upgraded by both Jefferies & Co. and UBS, which cited that cost cutting was helping share performance.
According to Shantanu Narayen, the company's president and chief executive officer "Despite worsening market conditions, we were able to manage expenses to deliver earnings and margin results within the target ranges we provided at the outset of the quarter."
The stock is trading down a bit in the morning session, giving up 0.5% to $18.36, down $0.09.
I will check back in after the market closes this afternoon and see just how well Adobe was able to manage expenses, and if it was good enough to keep earnings in line with what Wall Street is expecting to see.
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