Adobe (ADBE) at its analyst conference yesterday reported that fiscal Q4 2008 revenues were barely above those of the year-earlier quarter. Profits increased due to cost cutting.
While other segments increased sales year-over-year, flagship Creative Suite 4, or CS4, revenues were down 11% from year-earlier. Management also commented that compared to the launch of CS3, sales were running 20% slower. Management claimed that this was entirely due to the poor external economy. During the question and answer period several analysts asked if CS4 sales might be lagging because it is not a compelling upgrade to CS3. Management insisted that it is the best productivity enhancer since the invention of computer graphics, that everyone loves CS4, they just are slow to upgrade because of the cost.
Management is probably right on this. There really aren't any good alternatives for professional graphics people. People hate the high price of Adobe products, and they hate being squeezed by the upgrade cycle, but they hate being at a professional disadvantage to those who have upgraded even more. If there is any problem for CS4, it is that in a recession a large number of graphics and Web designers will lose their jobs or their clients. With the newspaper industry threatening to disappear in its entirety, and CS4 making the remaining graphics humans so much more productive, it could be that the CS4 client base will shrink permanently.
Future growth may come from the numerous other Adobe web initiatives. This is a company that knows how to innovate and squeeze money out of its customers (I point that out only because so many highly innovative technology companies lately have not been able to figure out how to make their customers pay for innovation). Case to point is video delivery over the Internet. A few years ago this was done mainly through Apple and Microsoft products. Now it is mainly done with Adobe Flash.
I agree with management that when this recession is over, Adobe will do better, but then I could say that of every company in the world right now.
For a full report on the financials, see my Adobe analyst conference summary for fiscal Q4 2008.
I don't own stock in Adobe. I do use Adobe products. I sometimes work for Adobe competitors and in the past have worked on books about Adobe products.
More data:
www.adobe.com
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