Adobe sees profit at low end of range, shares drop

Tue May 2, 6:17 PM ET
source: http://news.yahoo.com/s/nm/20060502/...NlYwN5bmNhdA--


SAN FRANCISCO (Reuters) - Software maker Adobe Systems Inc. (Nasdaq:ADBE - news) on Tuesday warned its second-quarter profit and revenue would fall at the low end of its March forecast due to weakness in Europe and North America, sending its shares down 7 percent.

The updated forecast by the maker of Photoshop editing and Acrobat document-sharing software followed disappointment in March when Adobe gave an outlook that was below average Wall Street estimates.

"I'm a little bit surprised," said Karen Haus, an analyst at WR Hambrecht. "Perhaps some people were expecting them to raise their guidance or come in at the high end," she said.

The company, which last December completed its $3.4 billion acquisition of animation tools firm Macromedia, said demand during the spring holiday periods in Europe and North America was weaker than expected.

Adobe bought Macromedia to complement its strength in editing and distributing static content such as text, photos and graphics with Macromedia's ability to create Web graphics and advertising and its Flash technology.

The company said it now expects fiscal second-quarter results to be at the low end of its March forecast that pegged revenue at $640 million to $670 million and earnings per share, excluding items, of 30 cents to 32 cents. Adobe plans to report its second-quarter results on June 15.

Analysts on average have forecast second-quarter revenue of $662.1 million, according to Reuters Estimates. Excluding items, the Wall Street view is for a per-share profit of 31 cents.

Adobe shares fell in after-hours trading on Inet to $35.70, down from a Nasdaq close of $38.35.

Adobe stock has gained 0.7 percent since the beginning of the year while shares of Autodesk Inc. (Nasdaq:ADSK - news), known for its Autocad design software used by architects and engineers, is up 16 percent over the past year. During the same time the Nasdaq has gained nearly 5 percent.

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