Adobe Systems (NASDAQ: ADBE), a software company whose colleagues include Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), issued Q3 results on Tuesday. Revenues dropped over 20%. Adjusted income was 35 cents per share versus 50 cents per share in the year-ago quarter.
As can be seen, Adobe is still suffering from the economic downturn. Not only did sales decline on a year-over-year basis, but they also dropped sequentially.Thankfully, management was at least able to beat expectations by a penny, as indicated by data at Earnings.com. Adobe also did relatively okay with operational cash flow.
I've always liked Adobe. And not just because the company makes those famous document solutions. Adobe's video-editing and effects software are also great products.
What is management going to do for long-term growth? Well, Adobe obviously has to focus on its core brands. But, as you may have heard, there's apparently room for an acquisition strategy, too.
Tom Taulli discussed Adobe's purchase of Omniture (NASDAQ: OMTR). As his thoughts indicate, this could be a good move for the business (it certainly was awesome news for shareholders of Omniture). Yet, those who hold Adobe might be a little concerned, at least insofar as any acquisition should cause concern. Does it mean that organic growth will be put on hold? Probably not in this case; and remember that past acquisitions helped to build the company into what it is today.
The arbitrage game is now going on between Adobe and Omniture. As I write this, Omniture is up over 27% and Adobe is down almost 7%. Obviously you should stay away from Omniture, but after looking at Adobe's chart, I see a possible opportunity in any pullback for the maker of Photoshop. As always, be sure to perform a round of due diligence before considering buying.
Disclosure: I don't own any company mentioned; positions can change without notice.
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