Digital media creation comes naturally to Adobe Systems
What Fools say:
Here's how Adobe's Motley Fool CAPS scoring rates against some of its peers and competitors:
Market Cap (millions) |
Trailing P/E Ratio |
||
---|---|---|---|
Apple |
$166,910 |
48.50 |
**** |
Adobe |
$24,710 |
38.00 |
***** |
Autodesk |
$11,510 |
34.00 |
**** |
Nuance Communications |
$3,690 |
N/A |
**** |
Avid Technology |
$1,070 |
N/A |
* |
There's plenty of love to go around for companies in the digital media space. Even so, Adobe stands out from the pack with an unbeatable five-star CAPS rating. The bearish crowd thinks that it's a brilliant company with an overpriced stock, while the bulls simply stick with the dominant market position in sectors like desktop publishing, video editing, and graphic design. And did you know that Adobe's Flash product powers Google's
What management says:
Longtime CEO Bruce Chizen is out, retiring at the tender age of 52. His replacement is former COO and president Shantanu Narayen, who recently told Businessweek that Adobe's CEO position is his dream job. "We are one of three or four companies in the world who can make the Web experience better than it is today," he said.
What management does:
This is fun to follow. Down, sideways, down go the margins, until POP! Last quarter happened. Over the summer, Adobe released fresh versions of nearly every major software package it sells, and the release of pent-up demand really shows. Management expects that momentum to carry over comfortably into this quarter.
6/2006 |
9/2006 |
12/2006 |
3/2007 |
6/2007 |
8/2007 |
|
---|---|---|---|---|---|---|
Gross |
91.2% |
89.9% |
88.6% |
88.8% |
88.3% |
88.5% |
Operating |
29.4% |
25.0% |
22.2% |
22.1% |
22.4% |
25.4% |
Net |
23.1% |
19.9% |
19.6% |
21.2% |
21.4% |
23.4% |
FCF/Revenue |
34.1% |
33.2% |
32.8% |
35.0% |
37.4% |
41.7% |
Growth (YOY) |
6/2006 |
9/2006 |
12/2006 |
3/2007 |
6/2007 |
8/2007 |
---|---|---|---|---|---|---|
Revenue |
27.0% |
27.5% |
31.0% |
19.6% |
17.1% |
21.9% |
Earnings |
1.9% |
(14.5%) |
(16.1%) |
(2.1%) |
8.4% |
43.0% |
One Fool says:
New management can sometimes be a headache, but not when the new CEO has been COO for two years already. Narayen knows the business like the back of his eyelids, and should hit the ground running. In any case, Chizen left with only a couple of weeks remaining in the quarter, so any changes in the company's direction shouldn't have an impact quite yet.
So it comes down to whether Adobe's updated software stands the test of time, and if sales can meet the steep expectations that were set up by last quarter's rocking results. If mighty Cisco
Then again, the Web is always growing and screaming for more and better-looking content. Hello DreamWeaver, Photoshop, Acrobat, and Flash! All in all, I don't see any reason to panic. Adobe is looking as strong as ever.
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