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Adobe beats estimates, drops outlook

The maker of Illustrator and Photoshop software lowers its forecast for the current quarter and chooses not to offer estimates for the second half.

Adobe Systems, which makes Illustrator and Photoshop software, beat Wall Street estimates Thursday but lowered its outlook for the current quarter.

Citing "challenging and uncertain economic environment," Adobe cut its current quarter growth target to 15 percent over the same period last year. The company also said it will not provide guidance for the third and fourth quarters of 2001.

"The potential for a global slowdown causes us to defer providing updated second-half targets until we have better visibility," Adobe CEO Bruce Chizen said in a statement.

Excluding noncash charges, Adobe reported operating income of $119 million, or 33 cents per share, compared with $89.5 million in the year-earlier period. A consensus of analysts expected the company to earn 28 cents per share, according to First Call.

Before Adobe lowered its revenue forecast in January, analysts were expecting the company to earn 30 cents per share.

Adobe's first quarter ended March 2.

Revenue for the quarter climbed 17 percent to $329 million from $282.2 million in the same period last year. Analysts polled by First Call expected the company to earn about $344 million.

"Revenue was a little light. (But) with respect to expectations, it's virtually a blowout quarter," WR Hambrecht analyst Bill Lennan said. "There were some people on the street who were calling for a doom-and-gloom scenario."

Lennan said he was surprised--but not bothered--by the company's decision not to give guidance for the second half of 2001.

"It is unusual, but it's sort of welcome. I think I'd rather have that than have people give numbers they're not sure they can hit," he said.

In a conference call after the earning's announcement, Chizen said he expects the company's revenue to pick up again as soon as the economy recovers. He dismissed any suggestion that Adobe has lost a significant customer base from the closure of dot-coms in recent months.

"The majority of Adobe's products are used in a broader network publishing environment, therefore we do not believe that issues around dot-coms and Web agencies have had, or will have, a significant impact on our business," he said.

Chizen added that although the company has experienced a slowdown of demand in the United States, there have been no signs so far of slowing in Europe and Japan.

The company also announced that Adobe co-founder John Warnock, 60, is retiring as chief technology officer. Warnock will remain co-chairman of the board, alongside co-founder Charles Geschke.