The Art of Adobe's Deal

Both Adobe and the Street are fairly bullish on what those numbers will be.

On average, analysts polled by Thomson First Call are expecting Adobe to post pro forma earnings of 29 cents a share for the first quarter on $650.3 million in sales. The consensus estimate excludes 14 cents to 15 cents a share in expected charges, stock options compensation, amortization and restructuring costs.

Adobe officials, meanwhile, have predicted earnings of 13 cents to 16 cents -- 28 cents to 30 cents a share excluding charges -- on sales ranging from $630 million to $660 million.

In the same period last year, before the Macromedia merger, the company earned $151.9 million, or 30 cents a share, on $472.9 million in revenue.

Looking forward, Wall Street is expecting Adobe to post a full-year profit of roughly 79 cents a share -- or, not including expenses, $1.29 a share -- on $2.72 billion in sales. For 2007, analysts are looking for $1.48 a share in pro forma profits on $3.1 billion in sales.

The San Jose, Calif., company has predicted 2006 earnings of 74 cents to 82 cents a share, or $1.26 to $1.30 a share excluding charges, on sales of roughly $2.7 billion. In fiscal 2005, Adobe earned $602.8 million, or $1.19 a share, on $1.97 billion in revenue.

Assuming that Adobe meets those expectations, there's likely to be little market-moving data from its earnings report, Ursillo says. But that doesn't mean investors will be tuning it out.

First there's the hunger for information about the Macromedia acquisition. Adobe officials have said that there is only limited crossover between the two companies' customers.

In other words, Adobe believes that it likely gained new customers through the acquisition and that it has the opportunity to sell more products to many of its customers.