The Art of Adobe's Deal
But then there's the potential for flash, Macromedia's widely used format for Web-based multimedia applications. Many companies already use flash for Web advertisements and many are starting to use it to deliver Web-based video. Should that become a standard, Adobe could see significant sales of its flash-creation software.
Web video "is going to be a pretty high-growth area in the next few years," says Chervitz, adding that Adobe "has the chance to be a major player in there."
Those factors could help mitigate the expected slowdown in sales of Adobe's creative suite later this year. The company has said that it plans to launch a new version of its software bundle early next year, and customers may delay a purchase until it's released.
That transition could also weigh on Adobe's stock price in the near term, Ursillo says.But the company usually sees a windfall when it releases new versions of its popular programs, and this time should be no different, Ursillo says, adding that the stock should rise later in the year in anticipation of the release. Recent personnel issues could also have an effect, Ursillo says. Murray Demo, the company's longtime CFO, announced his resignation in December. Adobe has yet to announce a replacement but could use the call to update investors on the search. Last week, Adobe announced that had hired John Loiacono, formerly the executive vice president of software at Sun Microsystems (SUNW), to head its division in charge of the creative software suite. Ursillo says he's hoping that the company will address its reasons for the hire. "That was a substantial hire," he says. "I'm curious what the hole was at Adobe for such a senior person. I would have thought [Adobe and Macromedia] would have had all their bases covered." Shares of Adobe closed Tuesday's regular session off 20 cents at $36.35.
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