Earnings Preview: Adobe Systems

Adobe Systems (ADBE) is expected to report Q4 earnings after market close Tuesday Dec. 16, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 58c for EPS and $918.25M for revenue, according to First Call.

Analyst Views

On Dec. 4, Adobe gave a disappointing revenue outlook and said it plans to cut 600 jobs, or about 8% of its work force. Adobe's expected revenue was between $912M-$915M, below the then consensus average of $930M. Adobe blamed weaker-than-expected demand for its new Creative Suite 4 family of products for the revenue shortfall. Earlier this fall, Adobe called the suite's launch the most significant in company history. The company forecast earnings, excluding items, 59c to 60c per share.

The company also said at the time it plans to cut 600 jobs, or 8% of its work force, because of slower revenue growth due to the global economic crisis. The job cuts will involve all locations and business units.

Cowen and Co. analyst Walter Pritchard said the slowdown in the company's sales is more sudden than he had expected -- but consistent with his view that the tough economy is going to hit Adobe hard. "The lowered guidance looks achievable, but in past downturns, the bottom has not been found this easily and thus the stock is without a catalyst until it becomes more clear the bar is set lower enough," wrote Pritchard, who rates Adobe a Hold.

Key issues for the conference call include forward guidance and an update on demand trends for CS4.