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Profits, revenue up for Adobe

The software maker reports record revenue and income for its fourth quarter, boosted by PDF-related sales and by strong growth in its publishing tools.

Software publisher Adobe Systems reported record revenue and income for its fourth quarter, buoyed by a new version of one of its main graphics packages and by strong growth for its publishing products.

The San Jose, Calif.-based company reported net income of $83.3 million, or 35 cents a share, for the final quarter of fiscal 2003, which ended Nov. 28. That compares with income of $40.1 million, or 17 cents a share, in the same period a year ago.

Excluding one-time charges, Adobe reported earnings of $83 million, or 34 cents a share. On that basis, estimates from analysts research firm First Call polled averaged 32 cents a share.

Revenue for the quarter was $358.6 million, compared with $294.7 million a year ago.

For the year, Adobe reported revenue of $1.29 billion, up from $1.17 billion in 2002. Net income for the year was $266.3 million, or $1.10 a share, compared with $191.4 million, or 79 cents a share, in 2002.

The most significant growth came from Adobe's ePaper division, which produces products and services based on the company's widespread Portable Document Format (PDF) for electronic distribution and presentation of documents. Adobe launched a number of projects during the year aimed at expanding PDF into a broad set of tools for exchanging business data.

Revenue in the ePaper division was $444.1 million for 2003, up 42 percent from a year ago. The division now accounts for more than a third of Adobe's overall revenue.

Shantanu Narayen, executive vice president of worldwide products for Adobe, said he expects continued steady growth from the ePaper division, as businesses migrate to new Adobe server products and services. "I think the results we're seeing are a validation that the platform we've built on the intelligent document side is resonating with customers," he said.

Adobe also launched its most significant product upgrade for the year in the fourth quarter, introducing a new version of Photoshop, the company's market-leading image editing application. Photoshop is sold as a standalone product and as part of a Creative Suite that includes new versions of the InDesign page layout program and Illustrator graphics tools.

Narayen said initial response to Creative Suite has been strong but it's still too early to tell how the package will fare against the stand-alone version of Photoshop and other products. "We think the value proposition to the customer in being able to reuse their assets across Web and print production" will push customers toward Creative Suite and boost InDesign's market share over competitor QuarkXpress, Narayen said.

For the current first quarter of fiscal 2004, Adobe predicted revenue of $460 million to $380 million and per-share earnings of 33 cents to 36 cents. For the full year, revenue is targeted at $1.43 billion.