The times, they are a-changin'. Adobe Systems
In the just-released third-quarter report, CEO Shantanu Narayen acknowledged the rapid changes up front: "Our industry is in the midst of a major transformation. We are aligning around two large initiatives: Content Authoring and Digital Marketing." And of course, he hopes to become a market leader in both categories.
Right now, the company looks nothing like the rocket-boosted growth engine it wants to be. Sales remained flattish 2.3% year over year to just more than $1 billion, while GAAP earnings fell 13% to $0.39 per share. The near future doesn't look much better: Management forecasts about 10% annual sales growth but another instance of lower earnings.
Those goals might not be terribly ambitious, but they still beat the Street consensus on both counts. Just remember that Adobe is jumping over a low bar here.
So Adobe's real value must lie beyond the next quarter, and rest instead on the two pillars of content creation and advertising that Narayen mentioned. Unfortunately, management isn't ready to talk about that longer-term promise yet. Analysts daring to ask for color on 2012 on the earnings call were swiftly batted down by either Narayan or CFO Mark Garrett with reference to the upcoming analyst day -- sometimes in sonorous two-part harmony. These guys should tour as a barbershop duo.
That said, Adobe claims to be gaining market share in the video-editing segment. That's only partly thanks to Apple's
And in a larger sense, Adobe is adapting to the new age of digital media. HTML5 authoring tools are being baked into the Creative Suite, you can now compile iPad apps from Adobe Air projects, and the lack of Air or Flash support on Apple products no longer looks like an insurmountable obstacle.
So if Adobe delivers on this creation-and-advertising vision, the company should do well in this increasingly mobile media era. But the fact that management won't set any firm long-term goals yet makes me a bit nervous -- ask again after that analyst day in November. If your portfolio is looking for a mobility play, those butterflies might just flutter away when looking at audio-chip expert Cirrus Logic
Fool contributor Anders Bylund owns shares of OmniVision Technologies, but he holds no other position in any company mentioned. The Motley Fool owns shares of Apple and Cirrus Logic. Motley Fool newsletter services have recommended buying shares of Apple, Nuance Communications, Adobe Systems, and Dolby Laboratories. Motley Fool newsletter services have recommended creating a bull call spread position in Apple as well as a diagonal call position in Adobe Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio, follow him on Twitter or Google+ , or peruse our Foolish disclosure policy.