Adobe Systems (NASDAQ: ADBE) reported earnings for the third quarter after the market closed on Tuesday. The document and movie software company saw a modest rise in revenues of 4%, coming in at $887.3 million. Adjusted earnings per diluted share came in at $0.50. This represents a growth rate of 11%. According to this source, the bottom-line results beat estimates by $0.04. Not a bad position to be in during this market crisis. In fact, the after-hours traders yesterday saw fit to bestow a 3.5% rise in Adobe's stock price.
I can't say I'm 100% happy with the earnings report. I saw that the cash flow from operations dropped 50% during the quarter. And there wasn't necessarily anything in the report that screamed "you must buy me now!" But I also can't say that this makes me completely bearish on the long-term prospects of the stock.
For one thing, Adobe's shares, while not near the 52-week high, are not close to the 52-week low. And I have a special affinity for Adobe. I enjoy hobby film-making, and I have to say that the company does put out a remarkable suite of products that can help the average individual edit digital footage and add effects to it. Yep, you just might find yourself making the next Blair Witch Project with some of Adobe's products. Considering that YouTube is turning nearly everyone into a budding director, I think Adobe will be selling a lot of software during its corporate lifetime. Oh, and let's not forget about its document solutions (everyone is familiar with .pdf files, correct?).
Last week's preview raised the question of whether consumers were turning to comfort foods in these uncertain times, specifically in terms of second quarter earnings of Campbell Soup (NYSE: CPB) and Krispy Kreme (NYSE: KKD). Campbell's strong earnings growth topped expectations, while Krispy Kreme narrowed its loss, though it fell short of estimates.
This coming week should bring reports from more food-related companies, from cereal maker General Mills and food packager CongAgra to grocery chain Kroger, to the parent companies of restaurants Cracker Barrel, Olive Garden, Red Lobster, Carl's Jr., and Hardees. Also look for reports from tech-related companies such as Oracle, Adobe, and Palm, as well as from financials Morgan Stanley and Goldman Sachs, and from economic bellwether FedEx.
Here's what analysts surveyed by Thomson Financial are expecting from some of the companies reporting earnings this week, as compared to their results from the same period of last year:
Editor's Note: This post comes courtesy of Sean Udall, a wise player in the tech field. For more, visit www.minyanville.com.
Interesting article on Apple's (NASDAQ: AAPL) iPhone "potential" teardown. Implications are that the 3G iPhone will carry higher margins than previous model. We will see shortly and I still expect Broadcom (NASDAQ: BRCM) to benefit from the actual teardown.
Speaking of Broadcom, the company got the all clear on a patent infringement deal with SiRF Technology Holdings (NASDAQ: SIRF) and I like the emerging technical setup on BRCM.
Elsewhere, Adobe (NASDAQ: ADBE) reports today and has been a solid tech name this year, really many years for that matter. I don't expect any big surprises.
Electronic Arts (NASDAQ: ERTS) is at the William Blair growth conference. Gaming sales were reported strong again last week. This is probably a cheap solid grower but I prefer the growing online gaming model, I've discussed on the Buzz in the past.
SunPower (NASDAQ: SPWR) was upgraded this morning and presenting at an Alternative Energy conference on Wednesday. I was going to trade this again but the analyst action is spiking the stock today.
Evergreen Solar's (NASDAQ: ESLR) shareholder and analyst meetings is scheduled this week and I'm thinking this could fuel bullish action.
Regarding Comverge (NASDAQ: COMV) and EnerNOC(NASDAQ: ENOC), I overheard some bullish comments on these stocks on CNBC this morning. I've discussed COMV on the buzz previously and ENOC is their sister company. Both companies offer technology solutions for managing the power grid more efficiently and I think both stocks are cheap emerging growth stocks.
Adobe (NASDAQ: ADBE)'s Flash player is used for most videos available on the internet. Almost all PCs use it for content play-back. Now, Adobe will use Apple (NASDAQ: AAPL)'s software development kit to develop the product for the iPhone.
According toThe Wall Street Journal, "In comments widely reported last month, Apple Chief Executive Steve Jobs said the company's iPhone hadn't adopted Adobe's mobile version of its Flash program because of technical and performance concerns."
Adobe obviously think Jobs is full of beans. It means to prove that by getting its Flash player on Apple hardware so that customers can watch video from tens of thousand of websites. The Flash player is on about 700 million PCs worldwide, which is why content companies use it.
What is curious is that Jobs would resist allowing iPhone customers the ability to watch a wide variety of content. It would seem that would make the iPhone an even more popular item.
Maybe Apple wanted some cash from Adobe for the privilege of being on the hot handset product, and the media player company said "no."
Douglas A. McIntyre is an editor at 247wallst.com.
Adobe (NASDAQ: ADBE) is recently up 56 cents to $35.23.
ADBE March 42.5 calls have traded 65 times on transaction volume of 11,635 contracts above its open interest of 335 contracts. ADBE March option implied volatility of 40 is above its 26-week average of 35 according to Track Data, suggesting traders expect upside price action.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Last week Forbes released its annual list of the fastest growing tech stocks, and it shouldn't be much of a surprise that Google Inc. (NASDAQ: GOOG) topped the list, with nearly $15 billion in sales, representing five-year sales growth of 155%, and 30% EPS growth. To make the list, companies had to have significant sales growth over the past year and five years, as well as a good earnings forecast for the next three to five years. Companies with significant legal problems or corporate governance issues were excluded.
So if, like Aaron Katsman, Georges Yared, and Jim Cramer, you are bullish on tech stocks, then there's plenty on the Forbes lists worth taking a look at.
Since 2001, I've been a customer of Adobe's (NASDAQ: ADBE) great product, Dreamweaver. Basically, it allows for the development of sophisticated websites. The product has gone through a variety of iterations, with the latest being Creative Suite 3.
So on Friday, I purchased the upgrade for $199.00 and downloaded it. Things went well until the software asked for my serial number from one of the older products I purchased.
Unfortunately, I got rejected.
Yes, I had to call customer service (which is usually pretty dicey). All in all, the customer reps were pretty good, though, one of them said that my prior purchases were not eligible. I tried to get an explanation, but I really couldn't understand it. Keep in mind that I have paid a total of $1,579.84 on Dreamweaver products over the years (which does not include the $199 recent purchase).
Even though it's the 25th anniversary for Adobe (NASDAQ: ADBE), the company still seems like a fast-growing upstart. For example, in yesterday's Q4 earnings report, the company posted a 34% increase in revenues to $911.2 million and net income was up 21% to $222.2 million, or $0.38 per share.
Adobe got a nice boost from a variety of major product launches, such as with Visual Communicator 3, the LiveCycle Enterprise Suite, and new versions of Creative Suite 3.
There was also an update to the hugely popular Flash video system (accounting for 76% of web video streams), which supports HD formats and has mobile device support.
Going into 2008, Adobe is definitely excited about its AIR initiative, which is a cutting-edge platform to create multimedia web applications. Companies like eBay (NASDAQ: EBAY), Salesforce.com (NYSE: CRM), Yahoo (NASDAQ: YHOO) and others have already created applications with AIR.
For Q1, Adobe expects revenues of $855 to $885 million, with earnings of $0.34 to $0.36 per share.
In today's trading, Adobe's stock is up 6.85% to $43.70 in early trading.
MOST NOTEWORTHY: Adobe, National Oilwell Varco and Cirrus Logic were today's noteworthy upgrades:
Deutsche Bank upgraded shares of Adobe (NASDAQ:ADBE) to Buy from Hold following the strong Q4 results, as they believe the negative sentiment around the stock creates an attractive entry point.
Calyon upgraded shares of National Oilwell Varco (NYSE:NOV) to Buy from Add on valuation, as they believe the market's reaction to the Grant Prideco (NYSE:GRP) acquisition was overly negative. They view GRP as a good strategic fit.
Cirrus Logic (NASDAQ:CRUS) was upgraded to Buy from Hold at Jefferies on valuation, as they believe the risk/reward is attractive.
OTHER UPGRADES:
Credit Suisse raised its rating on International Paper (NYSE:IP) to Outperform from Neutral.
JP Morgan upgraded Embarq (NYSE:EQ) to Overweight from Neutral.
UBS upgraded Royal Ahold (AHONY) to Neutral from Sell.
Good on Yahoo for sifting out another scrap of free web space to stick an ad on -- the leading web portal depends primarily on ad revenue, and this should add a little to its bottom line, or at the very least, keep Google from capitalizing. Newsletters, e-zines and other PDF providers should also benefit from a little more ad revenue without the fuss of negotiating rates and artwork from their sponsors.
With an easier means to embed ads in the document, niche content providers are that much more likely to adopt the PDF as a medium. And the ads don't show up on print-outs -- welcome news to folks concerned about the integrity of their content.
On news of the deal, Adobe was trading up 1.31% at $42.58 Thursday afternoon, while Yahoo sat at $26.32, 0.46% higher.
Adobe (NYSE: ADBE) announced on November 12 it is targeting annual revenue growth of approximately 13%. ADBE is scheduled to report on EPS on December 17. ADBE December option implied volatility of 40 is 32 according to Track Data, suggesting larger price fluctuations.
LDK Solar (NYSE: LDK) is a manufacturer of multicrystalline solar wafers. LDK has been investigating inventory allegations made by a former LDK employee, and the company is also subject to a SEC inquiry. LDK has said the company has correctly reported its inventories. LDK December option implied volatility of 123 is above its 18-week average of 92 according to Track Data, suggesting larger risk.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Last week's preview
Editor's Note: This post comes courtesy of Sean Udall, a wise player in the tech field. For more, visit 
Adobe
Last week Forbes released its annual list of the 
Since 2001, I've been a customer of 
Even though it's the 25th anniversary for 
and 
. He also operates 
Yahoo
Adobe
NYU's Roubini: 'All fronts' approach necessary to end global financial crisis 
Global Q&A: A rainy day in London
GE matches reduced expectation and people cheer
