Jay Vleeschhouwer - Merrill Lynch
... To what extent have the new bundles, the ones introduced immediately after the merger, been able to offset some of the weakness in CS, or might continue to be able to offset the weakness in CS, particularly as we go into the February quarter?
Shantanu Narayen-President, Chief Operating Officer:
... What we do expect is sequentially moving in Q4, we expect a slight up-tick as it relates to the fact that we will have the new Acrobat bundles. However, we continue to expect that people will delay purchases, whether it’s because of the Mactel issue, or in anticipation of CS3.
Having said that, the web bundle, which is the super bundle, so to speak, that we have today, a combination of both Creative Suite as well as Studio, continues to perform well, which really means to us that we are finding creative people want to standardize on the entire platform.
Let me also state up front that if you look at the Creative revenue, cycle over cycle, we have seen significant growth, which means our core strategy of getting people to standardize on the Creative platform is working.
Bruce Chizen, CEO
... I want to provide a little bit more color around that. What Shantanu said is we will see a small sequential increase in the Creative Suite business. That will be due predominantly because of the seasonality as well as the addition of the Acrobat Pro in those suites.Clearly Q1 will be a more challenging quarter for us. We expect to see a decline in the Creative business because it is the quarter before CS3, and because of the Mactel issue that we’re dealing with. Offsetting that to some degree will be Acrobat which, as we said, we’re shipping late this quarter, which means we’ll continue to see some benefit in Q1 and beyond Q1, and we continue to see strength in our video business, as well as some of the print products, like InDesign.
With that said, we do expect Q1 to be the weakest quarter of the fiscal year next year, and it will be down from Q4, at least that is what we are currently anticipating.
Adam Holt - JP Morgan
Two questions on Acrobat. Was the strength in the current quarter, in terms of the year-over-year growth, in your opinion largely driven on the enterprise side by people trying to buy in front of other release to lock in upgrade rights?
Secondly, and along that line, you had a pretty nice increase in deferred revenue. Were there any changes to the maintenance program in front of the 8 release? Thank you.
The increase in Acrobat, Acrobat has actually shown momentum ever since we introduced the current version of the Acrobat product. We continue to have Acrobat growth being driven by full units, which is new people who are adopting the Acrobat platform to share information reliably. We continue to see enterprises adopt Acrobat, but I would say Acrobat strength was really across the board.
Randy Furr-Executive Vice President, Chief Financial Officer
In terms of deferred revenue, I think this was the third or fourth quarter here in a row that we have seen an increase in deferred revenue. It ended up in total of $125 million at the end of Q3. We expect that to continue, that kind of trend going forward as our model shifts more and more to enterprise and license-based revenue.
In terms of the maintenance program, I don’t believe we made any significant changes. We ended up slightly tweaking our licensing prices to our customers beginning in August, but I don’t believe we made any major changes to the maintenance program.