Creative Suite boosts Adobe profits

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Adobe, the business and creative software maker, has pleasantly surprised the market with a substantial jump in second quarter profits.

Second quarter revenue rose 19 per cent to $887 million (£444 million), led by a 40 per cent increase in sales in the UK and Europe. Revenue grew 38 per cent in Asia, but just 0.1 per cent in the US.

The company reported a 41 per cent rise in quarterly profit at $214.9 million (£107.45 million), up from $152.5 million (£76.25 million) a year earlier.

But shares of the maker of Photoshop, Flash and Acrobat software fell three per cent after it gave a revenue forecast for the current quarter that was not as strong as some investors expected, analysts said.

"The key is the guidance for the August quarter," said Piper Jaffray analyst Mike Olson. "The midpoint of the revenue range is slightly below the consensus."

Adobe forecast fiscal third quarter revenue in a range of $855 million to $885 million (£435 million to £450 million).

"Clearly there are some things to pick at," said Goldman Sachs analyst Sasa Zorovic. "We talked to some investors who were expecting higher."

But he added that it was "a strong quarter" overall for Adobe.

Adobe is seeing strong revenue growth in Europe and in developing markets, chief executive Shantanu Narayen said.

In the first two quarters of this year, sales in Europe, the Middle East and Africa accounted for 35 per cent of revenue, compared with 33 per cent in all of last year and 30 per cent the prior year. Meanwhile, US sales have fallen to 44 per cent of revenue, from 49 per cent of revenue two years ago.

"We expect to see the trend toward international revenue continue," Narayen said.

"I'm not an economist. All I can do is reflect on what I have seen so far," he said. "Demand for our products remains strong. (But) we are not immune to a recession."

(Additional reporting by Duncan Martell in San Francisco)

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