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Macromedia inches back into black

The maker of software tools for Web publishing reports a jump in revenue and says that it climbed into the black for its latest quarter.

Macromedia reported a jump in revenue today and said that it climbed into the black for its latest quarter, as the company improved operations and updated some of its products.

The maker of software tools for Web publishing, multimedia, and graphics saw its stock trade at a year high today of 16.88, before closing at 16.5.

Macromedia has had a string of troubles during the past year, including financial losses, layoffs, management restructuring, a series of product delays that affected revenues, and a steady slide in the value of its stock.

Macromedia at a glance "The company has been transformed this past year," said Rob Burgess, Macromedia's chief executive. "There have been a lot of changes, such as aligning our strategy with the Web," he added, noting that three of the company's franchise products have been updated for the Web.

Burgess also attributed some of the revenue growth to the company's new Web products, including Dreamweaver, Flash, and Fireworks.

For the fourth quarter ending March 31, the multimedia software maker reported a net income of $2 million, or 5 cents a share, compared with a net loss of $15.3 million or 41 cents a share, reported for the same quarter a year earlier. Analysts had expected the San Francisco-based company to report profits of 3 cents a share, according to First Call.

Revenue climbed to $30 million, up 127 percent from $13.2 million a year ago.

Full-year revenue climbed 5 percent, to $113.1 million, compared with revenue of $107.4 million reported last year. Net loss for the year, including charges, was $6.2 million, or 16 cents a share, compared with $5.6 million, or 15 cents a share, last year. Excluding the one-time charge for the purchase of Solis in the third quarter of fiscal 1998, net income was for the year was $1.5 million, or 4 cents a share.

Analysts applauded the improvements the company has made, but said Macromedia is not yet out of the woods.

"The company has taken a lot of the right steps?it is in good shape," said Sujata Ramnarayan, a multimedia analyst at Dataquest.

But, she said, the company still has to come up with a high-end multimedia studio for the Net. "Director was not meant for the Internet," and the other new products are at the low level or mid range. "That is a challenge," she said.

A majority of Macromedia's revenues once were derived from sales of its products for the Macintosh. But things have changed. For the March quarter, 45 percent of the company's revenue came from sales of Mac software, down 11 percent from the same quarter a year ago.

Sales of Macromedia's Macintosh products accounted for about 44 percent of revenues for fiscal 1998, compared with 56 percent in 1997.

"Windows will continue to be a bigger part of the business, because it has 95 percent market share," said Burgess.

Although Windows products are expected to become an increasingly important piece of its revenues, "the company remains heavily dependent on the sale of products for the Macintosh platform," the company said in a filing with the Securities and Exchange Commission.

Falling sales of those products have indeed been a contributing factor to the financial troubles Macromedia has experienced over the past year, but all is not doom and gloom for the makers of Mac software.

Yesterday, Apple introduced its iMac consumer PC, which is expected to anchor Apple's reentry into the consumer market, both the company and analysts have said. The iMac won't be in retail stores, however, until August.

"The new Mac is good news for [Macromedia] in the sense that the Mac revenues have been declining," said Ramnarayan. "This should start an upward trend, or at least stabilize it."

Macromedia is also confident that Apple's product announcement yesterday is going to contribute to stronger Mac product sales.

"Since Steve [Jobs] took over?the company [Apple] has a pep in its step again," said Burgess. He said also that he expects Macromedia's Mac sales won't decline as sharply going forward, or will even grow because of Apple's PC introduction.

Despite the recent upside, today's 52-week high for Macromedia's stock is relatively low compared to the performance of the once high-flying stock in late 1995 and early 1996. Macromedia shares traded as high as 63.75 in December of 1995, but the stock proceeded to slide after revenues declined due to sluggish sales. Then, in late 1997, the stock dropped to 7.06.

(Macromedia chairman Bud Colligan is a director of CNET: The Computer Network, which publishes NEWS.COM)