Adobe Systems Inc.
has offered analysts and investors some updated guidance for its fiscal fourth quarter, and has also provided some growth targets for its 2002 fiscal year. The company is lowering its revenue and earnings per share targets based on “lower than anticipated revenue.”
Adobe is expecting quarterly revenue to come in between US$275 and $285 million, with pro forma earnings per share somewhere in the vicinity of $0.20 to $0.22. That’s about $35 million lower than Adobe originally expected for the quarter — the previous estimates were arrived at before the events of September 11.
Adobe president and CEO Bruce R. Chizen said September and October have been particularly tough for Adobe in the U.S. and Japan. “At this point in the quarter, it is clear that the economic impact from events of the past two months is having an adverse effect on Adobe’s business,” said Chizen.
In keeping with the grim economic outlook, Adobe also announced plans to reduce its staff by 150 people — about 5 percent of its worldwide workforce. The restructuring is expected to cost Adobe about $8 to $10 million this quarter. Chizen said that despite the headcount reduction, Adobe plans to “selectively hire” in research and development to help fuel future growth.
The company’s new fiscal year 2002 starts in December, and Adobe is targeting revenue of $1.3 billion for the year — an increase of about 4 to 5 percent year over year. Adobe is shifting its reporting segments a bit with the new fiscal year — Graphics replaces the former Web Publishing segment and includes Adobe Illustrator. GoLive and the Adobe Web Collection will be reported in Adobe’s Cross-media Publishing segment.
Accordingly, Adobe targeted revenue for FY2002 as follows:
ePaper Solutions segment: 15 percent year-over-year growth
Graphics segment: 5 percent year-over-year growth
Cross-media Publishing segment: 5 percent year-over-year decline
OEM PostScript and Other segment: 15 percent year-over-year decline
Adobe also expects to see FY2002 expenses track accordingly:
Research and development: 20 to 21 percent
Sales and marketing: 34 to 35 percent
General and administrative: 9 to 10 percent
Adobe said that it’s targeting gross margin of 93 percent, other income of $4 million per quarter, a tax rate of 32 percent and a share count increase of 2 million shares per quarter based on the final count at the end of FY2001. Those targets yield a pre-tax operating profit margin of 28 percent, according to Adobe, with pro forma earnings per share target of about $1.03 for the year.