Adobe Systems, Inc. (ADBE)

Because D&T said so!

Adobe's had a nice run, but it's been fueled mostly by cost-cutting. While Adobe is shrinking its North American workforce, it's actively hiring in India. Between laying off almost 20% of their workforce within the last 12 months, and the scarier brain drain of top talent leaving on their own to other companies (eg, Hamburg of Photoshop fame left in early 2008 for Microsoft, and others before and since have gone to Google, etc.), Adobe appears to be settling in for the big-company scenario of buying innovation rather than developing it in-house.

Unfortunately, Adobe has yet to play the acquisition game well. They've either bought companies already past their highly innovative stages (Macromedia), or are just paying too much for them (Omniture). They're buying technology to integrate into existing products, not buying new revenue streams from new markets.

Sure, CS5 will be a "success" for some definition of that word (ie, compared to CS4), but face it, CS revenue is not a growth business. Adobe already owns the Creative Professional market - that is, Creative professionals that use CS already have CS, so future revenue is mostly from upgrades, not new sales. That'll be a solid bump every time (economy permitting), but the bumps won't be getting significantly larger. Similarly, Adobe's other 800 pound gorilla product line, Acrobat, has also topped out.

Adobe missed the boat on mobile Flash, but the question for investors isn't when will the iPhone have Flash, but how will Adobe make money off the mobile market? Adobe hasn't shown they have a plan, much less that they "get" what it takes.

An American company that even China relies upon.

Outperform

Good interest protected products. Strong innovation with committed following

it's everywhere!

I don't know much about the Adobe Indians, but I hear they make a great spicy deer meat dish.

riding the growth of digital conversion with a good brand of products

Because i own it.

With a strong background in the software market, a solid client base, regular improvement and development, and stable maagement leads me to beleive that Adobe will outperform in a future digital market.

They already have great products. I just hope they can continue to excel with their recent aquisition of OMTR, which was also a strong company. Hopefully their hands aren't too full. I would hate to see either area not live up to its full potential.

A very confident company.

- Think .pdf + flash + the magnificent photoshop ... no meaningful competition to Flash and .pdf
- Flash is estimated to be installed in 99% of all desktop computers
- Reversely, 58% of photoshop is estimated to be pirated
- Gross margin of 89%, net margin 20% with a ROE of 28% - dominance translates to profits and capital leverage
- Profits increased by 27% past 5 years
- Average P/E 31

special advantage because they inovate. Good present valuation

A speculative pick: Can Adobe succeed in making it's flash 10.1 the standard for expressive content?

I think there is a good chance they have got the jump on this piece of computing real estate, and even if not, there might be some hedging of bets that will drive the stock price upwardly until Adobe definitively fails or succeeds in capturing this market.

First, my intuition is that Apple will come around to adopting it, and so everyone will use it as the base platform for video and other content on "all" handhelds, netbooks and desktops. With HD video still knocking on the door, and getting established as an expectation, Adobe's new Flash platform could become the swiss army knife of video content, that solves commercial interests' need for licensing control.

Can we bet on Open Source heroics to change the game? Maybe... but they are probably a little late and I think maybe Adobe and partners have pulled a coup.

THANKS T. & d.

their company is doing a little good but they are having a few problems

There is some risk with the integration of Omniture, but also lots of potential upside. Management appears to me to be making a bold move to expand opportunities and grow the business in a compatible way. The market is not so sure, and I think the market is wrong on this one. The fall back gives a better entry point.

I love Adobe products and own several, but cannot see an Outperform rating on the stock just yet.

- [ADBE] is currently tracking with the S&P, but not outpacing the trend line;
- Regardless of cheery pronouncements of the Recession being "over" (September 2009), the stark reality is that unemployment will continue to creep up, and more businesses will be shuttered over the next year or so;
- Most businesses - especially small businesses - are worried about keeping the lights on, and are poorly positioned to sink $3k - $10k in mainline commercial-grade Adobe products. Worse still, most tech-savvy individuals have cut back, with new purchases of high-end software well down the list of "must-haves";
- When the economy does recover, and individuals begin to recover well after that, Adobe's profits will no doubt surge again. Any signs of ebullience ahead of reality will just be a case of "excessive exuberance".