Adobe Q2 profit falls on acquisitions

SAN FRANCISCO - Adobe Systems Inc., which makes software such as Acrobat for creating digital documents, reported an 18 percent drop in second-quarter profit as acquisition costs negated higher sales. Also Thursday, the San Jose-based company forecast profit and revenue for the current quarter and remainder of the year that were below Wall Street's current forecast. Net income for the three months ending June 2 fell to $123.1 million, or 20 cents a share, from $149.8 million, or 29 cents, in the same quarter of last year. Sales rose 28 percent, to $635.5 million, from $496 million last year. "Q-2 was a challenging quarter," Adobe CEO Bruce Chizen said on a conference call with analysts. The company saw lower-than-expected sales of its Creative Suite product, which combines a host of Adobe titles, including Illustrator and Photoshop, executives said. Sales were especially weak in Europe and North America. Excluding costs for acquisitions, stock options and other expenses, profit was 31 cents, higher than the 30 cents analysts had expected, according to a Thomson Financial poll. Despite revenue falling below the $640 million to $670 million Adobe executives forecast in March, the company managed to meet its profit forecast of 30 cents to 32 cents excluding certain costs. Chief Operating Officer Shantanu Narayen said Adobe met the profit target by "managing the company appropriately." Adobe also said Stephen Elop, its president of worldwide field operations, is leaving by year's end because his long-term career goals don't match the responsibilities of his post. The former chief executive of Macromedia, Elop joined Adobe in April 2005, when Adobe announced its intention to acquire his company. Adobe closed its purchase of Macromedia Inc., which makes Web software, in December, a deal that was valued at $3.4 billion when it was announced. Adobe said profit before acquisition costs and other expenses in the current quarter would be 25 cents to 27 cents, below the average analyst estimates of 29 cents to 31 cents. Sales are likely to be $580 million to $610 million, Adobe said, below the average estimate of $629.1 million. The company also lowered its forecast for the remainder of the year, saying revenue would be $2.54 billion to $2.6 billion, compared with a March forecast of $2.7 billion. Analysts on average had been expected sales of $2.64 billion. Adobe shares fell 3.8 percent to $27.85 in late-session trading after the income report was released. Earlier, the stock rose 39 cents to close at $28.96 on the Nasdaq Stock Market.-GMANews.TV