Way to go, Adobe Systems (Nasdaq: ADBE). Not only did you churn out another fine quarter, but it looks like your management has its head screwed on straight, too. The fresh cash is going where a growing company needs it the most.
Adobe launched new versions of nearly every major product in its portfolio over the summer, and the third-quarter results showed great demand -- especially for the higher-margin premium packages. All of that carried over nicely into the just-reported fourth quarter, with record revenues in all three of Adobe's bread-and-butter segments.
So where is the company investing its loot? In research and development, of course. Any technology-oriented business worth its salt would agree that the future depends on coming up with newer, better, different solutions, and you can't do that without a commitment to research. Just ask Microsoft (Nasdaq: MSFT) about the early days of Gates and Allen, or look at the pulsating hive mind that is Google (Nasdaq: GOOG) today, and you'll get my drift.
"Research and development continues to be the primary area for our investments," said newly appointed CEO Shantanu Narayen. The "majority" of 117 new hires this quarter joined the engineering crew.
Not that today's product lineup is weak or anything. Narayen also said that about 76% of all Web video today is streamed through its Flash application, despite the best efforts of Microsoft and its Silverlight product. A mobile Flash version with full video support just saw the light of day, and wireless giants like Nokia (NYSE: NOK) and NTT DoCoMo (NYSE: DCM) have already considered developing handsets and services around it.
Going the other direction, a new development platform dubbed Adobe Integrated Runtime (AIR) is meant to make desktop applications out of Web content. Business-to-business specialists like Salesforce.com (NYSE: CRM) and consumer-oriented outfits like Yahoo! (Nasdaq: YHOO) have already come up with early uses for this technology, and with Adobe's marketing reach in mind, I think we'll see AIR popping up all over the place in the next few months.
That was a yummy quarter, with an even tastier future outlook. I'm getting hungry for some Adobe stock.
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