Adobe Systems Incorporated (NASDAQ: ADBE) reported results for its fourth quarter and fiscal year ended Nov. 30, 2007 (Q4 2007):

• Adobe posted record revenue of $911.2 million versus its revenue target range of $860 to $890 million and a First Call estimate of $887.3 million.
• Adobe’s GAAP diluted earnings per share for the fourth quarter of fiscal 2007 were $0.38; Adobe’s fourth quarter GAAP earnings per share target range was $0.35 to $0.37.
• Earnings per share for Q4 2007 on a non-GAAP basis were $0.49; Adobe’s fourth quarter non-GAAP earnings per share target range was $0.46 to $0.48; First Call was at $0.48.

NEXT QUARTER GUIDANCE:

• For the first quarter of fiscal 2008, it is targeting revenue of $855 million to $885 million; targeting a GAAP operating margin of 30% to 31%; targeting non-GAAP operating margin of approximately 40% based upon 586 million and 588 million shares outstanding; First Call has estimates $835 million.
• Q1 2008 GAAP earnings per share target range of $0.34 to $0.36 and it is targeting $0.44 to $0.46 non-GAAP EPS; First Call has $0.42 as consensus.

FISCAL 2008 GUIDANCE:

• For fiscal 2008, Adobe reaffirmed it is targeting annual revenue growth of approximately 13%, which brings an interpolated estimate of $3.568 Billion in revenues.  First Call has estimates at $3.55 Billion.
• Adobe is targeting a GAAP operating margin of approximately 30%, and a non-GAAP operating margin of approximately 39%.

Adobe is also adding 30 million shares to its buyback plan, which makes the total share buyback plan up to 50 million shares.  To date, Adobe has retired 17.7 million shares under the existing share buyback plan.

Shares closed down 2.8% at $40.90 today in normal trading, and shares have been teetering between being positive and negative in after-hours trading.  The 52-week trading range is $37.20 to $48.47.

Jon C. Ogg
December 17, 2007

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

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