Adobe Draws Pretty Picture

The graphics software maker tops Street estimates and approves a 2-for-1 stock split.
By Bill Snyder ,

Updated from 4:36 p.m. EST

Adobe Systems

(ADBE) - Get Report

on Thursday delivered the strong first quarter results Wall Street was expecting and even provided a bit of upside to its recently boosted guidance.

The company also announced a 2-for-1 stock split effective at the close of business on May 2 and pegged the current dividend at .0125 cents per share. But in the future, money that would have gone to dividends will instead be used as part of the company's stock buyback plan.

Net income for the quarter was $151.9 million, or 60 cents per diluted share, compared with a profit of $123 million, or 50 cents a share, in the year-ago quarter.

Driven by torrid sales of the new version of its popular Acrobat document management package, revenue was a record $472.9 million, up 11.7% from $423.3 million in the same quarter last year.

Looking forward, the company expects to earn a second-quarter profit ranging from 51 cents to 55 cents a share, on sales ranging from $475 million to $495 million. Analysts polled by Thomson First Call were projecting a profit of 51 cents with revenue of $478.16. The company also boosted guidance for the full year, saying it expects to post $1.925 billion in revenue, up from an earlier projection of $1.85 billion to $1.9 billion and a bit above expectations. Adobe did not give an earnings projection.

The strong first quarter wasn't a big surprise. Adobe

upped its guidance for the quarter in early February, telling Wall Street to expect a pro forma profit of 47 cents to 51 cents a share on sales ranging from $450 million to $470 million. Since then, the already highflying stock has appreciated by 9%, as many investors figured that the company would likely provide a bit of upside.

Although Adobe has been a very solid performer, some analysts are looking for evidence that the stock

has not gotten too expensive (it's gained 56% since July) and will be able to push past its $65 a share ceiling for more than a session or two.

CEO Bruce Chizen said the company expects to announce a major product launch later this quarter. Analysts have speculated that the company's Creative Suite, which includes many of Adobe's major products, is a likely candidate for an upgrade.

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