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.
Forbes reports that Adobe Systems (NASDAQ: ADBE)'s CEO Bruce Chizen is stepping down next month to be replaced by president and chief operating officer, Shantanu Narayen. Third-quarter revenue was up 40% from the previous year. On the way out, Chizen raised Adobe's revenue target for the fourth quarter to be near the high end of the previously disclosed range of $860 million to $890 million, and Adobe is targeting overall revenue growth for fiscal 2008 to be about 13%.
In The Burning episode of Seinfeld, Jerry explains to George Costanza the idea of Showmanship: "Showmanship, George. When you hit that high note, you say goodnight and walk off." With his departure, Chizen appears to be following this principle. During Chizen's seven year tenure, Adobe's software platforms -- Acrobat, for making PDF files, and Flash for displaying videos -- are all over the place thanks to the rise of Web 2.0. Adobe is also planning to launch a Web version of the popular photo-editing software Photoshop by the end of 2007.
New CEO Narayen plans to keep Adobe grounded while expanding it into mobile devices. According to CNETNews, he'll be introducing Adobe Integrated Runtime (AIR), software that allows Web applications to run on desktop PCs. He'll also extend applications written for AIR and Flash to help Adobe expand its reach further into mobile devices and set-top boxes and gaming machines.
Unless it's later discovered that Chizen quit for some nefarious reason, with its stock off 17% from its all-time high a few weeks ago, this could be a good entry point.
Barron's Online's (subscription required) "Inside Scoop" column reported that Adobe Systems (NASDAQ: ADBE) founder and co-chairman John Warnock sold 25K shares for $1.1M last week, according to SEC data.
The Wall Street Journal (subscription required) reported that Ben Bernanke, the Federal Reserve chairman, last night said that while the housing market will continue to be a "significant drag" on the U.S. economy next year, strong income growth has kept consumer spending steady.
OTHER PAPERS:
Verizon Communications (NYSE: VZ) told Congressional investigators that it has provided customers' telephone records to federal authorities in emergency cases without court orders hundreds of times since 2005, reported the Washington Post.
Ad agency WPP Group (NASDAQ: WPPGY) is in final negotiations to acquire Blast Radius, an Internet agency, reported the U.K. Times.
Smith & Nephew (NYSE: SNN) is being investigated by the SEC on bribery allegations, according to the U.K. Times.
Activist investor Knight Vinke is attacking HSBC (NYSE: HBC) once again, according to the U.K. Times.
WEBSITES:
DigiTimes.com reported that Taiwan Semiconductor Manufacturing Company (NYSE: TSM) has denied a report by the Ottawa Citizen which speculated that Taiwan Semi was seeking to acquire Canadian design house Emerging Memory Technologies, saying the rumors were false.
TechCrunch.com reported that Napster (NASDAQ: NAPS) is switching from its desktop client to a fully web based client, enabling users to listen to their music from any computer after logging into the service.
Traditional software companies are scrambling to deal with the Internet. Take Adobe Systems Incorporated (NASDAQ: ADBE), which is ramping its on-demand offerings.
In fact, today the company announced that it has snapped up Virtual Ubiquity. The company operates Buzzword, which is a web-based word processor and collaboration platform. The financial details were not disclosed.
It certainly helped that Buzzword has adopted a variety of Adobe technologies, such as Flash and Flex. Interestingly enough, Adobe invested in the firm a year ago.
So is Adobe trying to take on Microsoft Corporation (NASDAQ: MSFT)'s Office? Actually, I don't think so. Hey, if anything, Adobe understands Microsoft very well – and also realizes that there is still a lot of opportunity in the graphics/design market. Instead, I think Adobe is trying to use new technologies to improve its core strengths.
I had a chance to talk to Frank Zamani, who is the CEO of Caspio (which operates an on-demand web application platform). According to him:
"As Oracle Corporation (Nasdaq: ORCL)'s Larry Ellison says, in the future there will be only a handful of very large software companies. Adobe is certainly going to be one of them. According to Triple Tree, the SaaS (software as a service) market by 2009 will be 40% of the software market. The question is whether Adobe is going to leverage its fantastic brand name to expand into SaaS. This acquisition demonstrates that they are thinking in that direction. It will be interesting to watch if they will stick to document management or embark on a broader SaaS strategy."
The Justice Department came to an agreement with Microsoft (NASDAQ: MSFT) in 2002 to regulate what the government saw as non-competitive actions by the big software company. According to Reuters: "Microsoft was found to have unlawfully used its monopoly in personal computer operating systems to discourage computer manufacturers from loading non-Microsoft software on their machines."
Now, the feds are saying Microsoft is doing just fine playing with others and the issue of competition has receded. Not so, say several state attorneys general. They don't believe that Gates & Co. have done much to mend their evil ways.
It is hard to say how the states measure this. Does Linux have a better footprint in the server market? Yes. Is the PC market more open to operating systems outside Windows? No. But until Apple (NASDAQ: AAPL) makes its OS broadly available there are not any other alternatives.
Microsoft is certainly using the OS to help it in other areas, like keeping its browser in first place. But areas like web video are now dominated by Adobe (NASDAQ: ADBE)'s Flash platform. That was not true five years ago. PC software security is dominated by Symantec (NASDAQ: SYMC).
If there hadn't been a federal case against Microsoft, the landscape might remain the same as it was throughout the 1990s. But, with competition from Google (NASDAQ: GOOG) and other large software companies, it is hard to say that conditions have not changed.
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