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It's Time To Go Sour On This Software Company

|Includes: ADBE, International Business Machines Corporation (IBM)

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Adobe Systems (NASDAQ: ADBE) got a nice 5.5% pop in its stock last week, even after reporting fiscal 2Q EPS that fell 66% year-over-year. Although earnings were down due to weak product sales and rising operating expenses, the software company managed to beat consensus by 5% and reiterated positive news on its move from packaged software to the cloud.

Adobe now offers the Creative Cloud, which allows customers to pay a monthly fee to subscribe to applications, such as Photoshop, Illustrator, Dreamweaver and others. This new model offers flexibility for its users and Adobe announced it had 700,000 paid Creative Cloud subscribers at the end of the quarter, a 221,000 increase from the end of 1Q.