Adobe reported diluted earnings, including restructuring charges and other one-time costs, of 14 cents a share for its fiscal fourth quarter and revenue of $264.5 million, compared with 31 cents a share and $355.2 million in the same period a year ago.
CEO Bruce Chizen said the company, which produces design software used by print and online publishers, has been hit particularly hard by the economic slump because of its dependence on advertising-related customers.
"Organizations are spending less money on marketing," Chizen said during a conference call following the announcement. "Those products targeted at the creative professional are reflecting that."
Excluding one-time charges, Adobe reported fourth quarter earnings of 20 cents a share. On that basis, analysts polled by First Call had predicted earnings of 21 cents a share
San Jose, Calif.-based Adobe lowered its fourth-quarter targets in its midquarter update Oct. 30, citing the slumping economy and aftereffects of the Sept. 11 terror attacks on the United States. In the midquarter update, the company pegged its fourth-quarter revenue at $275 million to $285 million, down from previous estimates of $310 million to $320 million. Earnings per share, excluding charges, were forecast at 20 cents to 22 cents, compared with its original estimates of 27 cents to 28 cents.
As part of its midquarter update, Adobe also announced layoffs of about 150 employees--around 5 percent of the company's work force.
The company went on to eliminate an additional 100 jobs, Chief Financial Officer Murray Demo said during the conference call. The extra cuts allowed the company to invest more in digital imaging and other growth areas, he added.
Sales were down slightly for the full fiscal year, with Adobe reporting revenue of $1.23 billion for fiscal 2001, compared with $1.27 billion in fiscal 2000.
Net income, which includes nonoperating gains and losses, for the fourth quarter was $34.4 million, compared with $79.2 million in the same period a year ago and $40.3 million in the third quarter.
Adobe sees little pickup in the immediate future, estimating revenue of $265 million to $280 million for the first quarter of fiscal 2002 and earnings per share of 20 cents to 22 cents. Analysts had forecast revenue of $292.5 million and earnings of 23 cents a share. Company executives said they were sticking with previous forecasts for total 2002 revenue of $1.3 billion.
Adobe executives said they expect the company to benefit next year from the second-quarter release of a new version of Photoshop, the company's premiere graphics editing program, for Apple Computer's new Mac OS X operating system.
Chizen said the maturing of the market for Web design software, as evidenced by competitor Macromedia's grim earnings warning Wednesday, should also help Adobe gain market share as it emphasizes products that serve both print and digital needs.
"The market for Web-only products--we don't believe is going to be a significant market," Chizen said. "We believe most customers want a cross-media solution, and the market is bearing that out."