Adobe (ADBE) Beats Estimates, But Traders Question In-Line Guidance

Adobe Systems Inc. (ADBE-NASDAQ) has reported earnings at $0.37 EPS non-GAAP and revenues of $745.6 million, compared to First Call estimates of $0.35 EPS and $728.2 million revenues. Adobe’s proior second quarter revenue target range was $700 to $740 million. Adobe’s GAAP earnings per share for Q2 2007 were $0.25, based on 603.4 million weighted average shares.

Bruce Chizen, CEO of Adobe: "Q2 was a strong quarter, driven by the record performance of both our Creative Suite products and Acrobat. Assuming continued business momentum, we expect to exceed our original fiscal year revenue and profit targets."

GUIDANCE: For Q3 2007, Adobe announced it is targeting non-GAAP EPS of approximately $0.39 to $0.41, revenue of $760 million to $800 million, non-GAAP operating margin of approximately 39%; estimates are $0.40 EPS and $777 million in revenues; it;s also targeting its share count to be between 607 million and 609 million shares.

We noted in the earnings preview that the current valuations have it priced for perfection: $25.9 Billion market cap and at 29.8-times 2007 earnings estimates and more than 8-times 2007 projected revenues.  Shares are trading down about 1.5% at $43.30 and that is after shares gave up earlier gains to close down 0.3% at $43.96.

Jon C. Ogg
June 14, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.