Software maker Adobe Systems Inc. reported more than a 50 percent drop in net income for the fourth quarter compared to the same quarter a year earlier. The company blamed the shortfall on weak demand for its publishing products as companies around the world reduce spending on software for creative marketing, such as its Photoshop editing software.
Net income for the fourth quarter ended Nov. 30 totaled US$34.3 million, or $0.14 a share, down from net income of $79.2 million and earnings per share of $0.31 in the year-earlier quarter.
Excluding special one-time charges, Adobe reported income of $67.9 million, down from about $127 million in the quarter a year earlier. Adjusting for those charges, earnings per share was $0.20, compared to $0.34 per share a year earlier.
Revenue for the fourth quarter totaled $264.5 million, compared to $355.2 million in the fourth quarter last year.
Analysts polled by Thomson Financial/First Call had expected Adobe to report earnings per share of $0.21, excluding one-time charges, and revenue of about $279 million.
During a conference call with analysts following its earnings release Thursday, Adobe's chief executive officer Bruce Chizen said he was "disappointed" that revenue came in below the company's target range but was satisfied with the company's efforts during the quarter. "We have maintained or gained market share in our major markets," he said.
"The weak global economy is having a major impact on our business," Chizen added. "Until corporations begin to spend more marketing dollars, this negative impact on creative professionals, and Adobe's products, will remain."
During the fourth quarter, Adobe reduced its work force by 247 employees and reported a restructuring charge of $12.1 million, which was reflected in its earnings Thursday. The company also expanded its product offering with new versions of its publishing software for Apple Computer Inc.'s Mac OS X operating system.
Last week, the company announced that it had acquired Fotiva Inc., a small maker of Web-based software for editing and sharing digital images over the Internet. In addition to new network publishing software under development at Adobe, the company said it will release new software based on technology acquired from Fotiva. "We have laid the foundation of the future of Adobe around network publishing," Chizen said.
For the full year, Adobe reported revenue of $1.23 billion, compared to $1.27 billion in the prior year. Full-year net income was $205.6 million, compared to $287.8 million in fiscal 2000.
Looking ahead, Adobe said it expects revenue for the first quarter of 2002 to come in between $265 million and $280 million. Earnings per share in the first quarter will be $0.20 to $0.22 per share. Prior to the guidance given Thursday, analysts polled by Thomson Financial/First Call had expected Adobe to report adjusted earnings per share of $0.23 on revenue of $292 million.
In another event Thursday related to Adobe, Dmitry Sklyarov, the Russian programmer who was arrested in July for creating a program that allowed users to hack Adobe's eBook Reader software, was set free by the U.S. government in exchange for agreeing to testifying against his company for allegedly infringing on U.S. copyright law.