Adobe Systems (ADBE), a software business dedicated to document solutions and video-editing products, reported Q4 results Tuesday. If you're a shareholder, you might not be too happy since there were declines across the board.
Revenues dipped 17%. Earnings per share on an adjusted basis slid 35% to 39 cents. Net cash from operating activities declined 25%. Yeah, I'd say it was a bit of a disappointing release. Interestingly enough, though, it looks like the market wasn't too worried by the numbers. The stock closed higher on Tuesday by 1.6% before the report was issued. At the conclusion of the after-hours session, Adobe was unchanged.
Adobe is also not far from a 52-week high. According to this Reuters piece, management expects demand to pick up over time. Also, the 39-cent figure of per-share profit beat estimates by two pennies. This helps explain why Wall Street wasn't so spooked by the malaise seen in the stats.
When it comes to long-term prospects, I think Adobe can be considered a potential winner. The brand has resonance with PC users. The company's software is iconic, and although there are obviously a vast number of diverse opinions out there when it comes to how good the products are, I believe there's a significant amount of overall satisfaction with the trademark. As an example, many a budding Spielberg has loaded up some of the Adobe programs relating to movie-making. And then there is the recent acquisition of Omniture, a move which should, theoretically at least, add value as the years go by.
As far as software companies go, I'd be more inclined to look at Microsoft (MSFT) right now, but I don't think it would be a waste of time to check out Adobe. The stock is doing well, and the fundamentals should improve. Patient investors have the advantage here.
Disclosure: I don't own any company mentioned; positions can change without notice.
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