Would Apple Buy Adobe? I Doubt It.

Is Apple (AAPL) thinking about buying Adobe (ADBE)?

That’s columnist Robert Cringely’s theory. Not for the first time, Cringely asserts that an Apple deal for Adobe could be in the offing. By way of evidence, he asserts that Apple was “quietly shopping around its entire professional application business” - which includes Final Cut Pro, Aperture, Logic and Shake - “to prospective buyers at the recently completed National Association of Broadcasters show in Las Vegas.”

Those applications help drive Mac sales; why would Apple want to sell them? Cringely says that “there is only one real reason why Apple would sell off its professional applications and that’s to avoid antitrust problems when/if Apple buys Adobe Systems.”

I suppose it is possible, but such a move would be hugely out of character for Apple, which has done very few substantial acquisitions over the years. And while Apple certainly has plenty of cash - $19 billion and change - the entire pile would not be enough to buy Adobe, which has a market cap of $21.3 billion. Throw in a decent premium, and you would be looking at a $30 billion deal. Possible, I would say, but not probable.

Adobe shares today were up $1.18, or 2.8%, to $40.38 at close, although I suspect the rise has less to do with Cringely’s rumor-mongering than with a well-received meeting with analysts yesterday that triggered a flurry of bullish analyst notes this morning. UBS analyst Heather Bellini notes that Adobe yesterday said Q2 results should be at the high end of its previous revenue and EPS guidance range; she raised her FY 2009 EPS estimate by a penny to $1.91, and upped her price target on the stock to $38 from $35, and other analysts made similar moves.

Meanwhile, Apple shares were up 63 cents on the day, to $180.94.

Comments

[NJgolfer:]

ADBE is well positioned. Would be a buyer here.

2008 May 02 05:16 PM

[Stocks Simp...:]

AAPL is looking like a great buy right now. I wouldn't want to get into ADBE right now maybe if it starts to form a nice uptrend.

www.stocks-simplified....

2008 May 02 08:39 PM

[Zach Bass:]

It would certainly solve a lot of problems Apple has with Adobe. Like putting Intel versions to market ahead of Mac compatible versions. Photoshop in particular, drives sales of Macs. And then there's licensing postscript. But I agree, the price is to steep, and probably not worth these inconveniences.

-zach bass
www.zachbass.com

2008 May 02 10:06 PM

[PK de C'ville:]

Eric,

Your thought about Cringely are commendable.

Here's my plea: Apply your critical thinking to other analysts you cover! I'm thinking of Toni, the Counter, Sacconaghi and Scott, the 'Informed Wall Streeter', Morritz. These guys MAKE UP THINGS out of thin air, just as wild ass crazy as Cringely, YET YOU ONLY REPEAT THEIR DRIVEL w/o commenting critically as you have here.

Please Eric, do this for your readership; you'll sleep better knowing you did the RIGHT THING. (We're suspecting you'd rather get clicks than be thoughtful. Is that true?)

2008 May 03 08:28 AM

[effectsdroid:]

I can't see Apple selling off Final Cut and the suite of apps that come with it, as well as, Logic Studio to get Adobe's inferior Premiere and it's associated applications. I would imagine Apple, if it could, would get rid of Adobe's video products and keep the Adobe flagship apps like Photoshop, Illustrator, After Effects and the acquired Macromedia stuff.

I doubt it will happen.

2008 May 03 04:53 PM

[brewer:]

Apple doesn't need Adobe so much anymore. And Apple doesn't buy large companies to use them, they only buy small ones to integrate into something larger.

2008 May 03 10:19 PM

[steveballmer:]

This is some really massive misinformation! It will never happen! I better not! Now MS and Yahoo, that's a gooood deal!

2008 May 03 11:06 PM