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Adobe Systems (ADBE): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:

Adobe's fourth quarter earnings exceeded the Zacks Consensus Estimate by 5 cents. However, management provided strong first quarter revenue guidance. But the transition to web-based subscription for Adobe's Creative Suite 6 from traditional box licenses could impact its near term revenue. However, we remain optimistic about Adobe's market position, compelling product lines, continued innovation, acquisitions and strong balance sheet. Also, solid adoption of the Creative Cloud and Adobe marketing cloud could serve as potential catalysts, going forward. However, end-market recovery appears slow which remains a matter of concern. We are therefore, reiterating our Neutral rating.

Overview:

San Jose California-based Adobe Systems Incorporated is one of the largest software companies in the world. Adobe picks up licensing fees from customers, which form the bulk of its revenue. It also offers technical support and education, which account for the balance. Since, fiscal 2012, the company operates through three segments.

The Digital Media Segment solutions segment enables small businesses and enterprises to create highly compelling content, deliver it across diverse media through smartphones, tablets, e-readers, and other devices, and then optimize it through systematic targeting and measurement. Within Digital Media, the two major components of revenue are the Creative family of products and Document Services products. The target customers are traditional content creators, web application developers, digital media professionals and user interface designers/developers, writers, videographers and photographers.

The Digital Marketing solutions segment provides insight into the performance of digital marketing initiatives, empowers organizations to make informed decisions, and tries to ensure the success of online marketing programs. The target customers are digital marketers, advertisers, publishers, merchandisers, web analysts, chief marketing officers and chief revenue officers.

The Print and Publishing segment supports technical and business publishing through a special printing and imaging page description language and a PDF-based workflow regulation platform. The target customers are professional graphics and content publishers, as well as OEMs offering workflow software, printers and other output devices.

Products are sold through distributors, retailers, software developers, systems integrators, ISVs and VARs, as well as through OEM and hardware bundle customers. Given the scale of operations, the company has a host of competitors. Largest among them are Microsoft, Corel, Mediascape, BEA Systems, Apple, Google, Kodak, Sonic, Sony, Yahoo, Dell, HP and Nikon.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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