Adobe Systems Incorporated (ADBE) Earnings: An Early Look

Adobe Systems Incorporated (NASDAQ:ADBE)Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Adobe Systems Incorporated (NASDAQ:ADBE) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Software giant Adobe Systems Incorporated (NASDAQ:ADBE) is best known for its PDF-reader and photo-editing software, but the company has a much broader reach across the creative-design, publishing, and online analytics segments. Let’s take an early look at what’s been happening with Adobe Systems Incorporated (NASDAQ:ADBE) over the past quarter and what we’re likely to see in its quarterly report on Tuesday.

Stats on Adobe

Analyst EPS Estimate $0.31
Change From Year-Ago EPS (46%)
Revenue Estimate $986 million
Change From Year-Ago Revenue (5.7%)
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Will Adobe paint a prettier picture this quarter?
Analysts have had some concerns about Adobe’s prospects in recent months, cutting their earnings estimates for the just-ended quarter by $0.02 per share and slashing nearly a dime from full fiscal-year 2013 consensus earnings. But the stock hasn’t responded badly to those fears, rising 10% since mid-December.

Among consumers, Adobe’s Acrobat PDF-reader and Photoshop image software represent the company’s most visible products. Yet among investors, Adobe Systems Incorporated (NASDAQ:ADBE) is arguably best known for the battle it had with Apple Inc. (NASDAQ:AAPL) over its Flash software, as Apple infamously said it would never include Flash in any of its mobile devices. In response, Adobe shifted to the more widely accepted HTML5, showing the influence that the iDevice maker had in the mobile space.

Adobe has had difficulty bouncing back both from that battle and the broader economic recession. Although Adobe Systems Incorporated (NASDAQ:ADBE) has grown its revenue, profits still lag behind where they were in 2008. Moreover, last quarter, it gave disappointing guidance for 2013, pointing to expected revenue and profit declines for the fiscal year. Right now, analysts expect a 40% drop in earnings per share this year, with only a muted bounce in fiscal 2014.

Looking forward, the company is trying to join the trend toward cloud computing with its “Creative Cloud” initiative, whereby Adobe will offer monthly subscription packages rather than pricey software licenses. Yet as better-established cloud rivals salesforce.com, inc. (NYSE:CRM) and International Business Machines Corp. (NYSE:IBM) build out their offerings, they’re likely to come up with products, either on their own or through partnerships with smaller companies, that will compete directly with Adobe’s offerings.

In its quarterly report, watch for Adobe to give a status update on its efforts to become a bigger player in the cloud-computing industry. For better or worse, Adobe Systems Incorporated (NASDAQ:ADBE) appears committed to the strategy, and the short-term impact on earnings could lead to more rewarding long-term success if the company can figure out how to beat its new rivals.

The article Adobe Earnings: An Early Look originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns shares of Apple. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Adobe Systems, Apple, and salesforce.com and owns shares of Apple and IBM.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!