The new year was already looking interesting for Adobe Systems ( ADBE), which expects to launch a long-awaited update to its flagship Creative Suite in the spring.

But things became even more interesting for the maker of Acrobat and Photoshop software week after Apple ( AAPL) captivated the tech world this week with the unveiling of the iPhone .

The new device is likely to kick off a mobile-content arms race among carriers, and Adobe is well-positioned to supply some of the ammo. Here's why:

Adobe, which snapped up Macromedia at the end of 2005, has already established a strong beachhead in the telephony world via a deal with Japanese telco giant NTT DoCoMo ( DCM). A compact version of Macromedia's flash multimedia player, called Flash Light, is now on millions of phones in Japan. What's more, DoCoMo is using a server version of the player, called FlashCast, to push content to the company's "ichannels," which include news, sports, weather and so on.

Every time a Japanese consumer hits an ichannel, Adobe collects a bit of revenue. To be sure, Adobe's mobile and device solutions business unit is still a small part of the San Jose, Calif.-based company's revenue. In the fourth quarter, mobile revenue was about $12.1 million, or 2% of overall sales, and $32.7 million on the year.

But that number is a bit misleading. Purchase accounting rules related to the Macromedia acquisition kept some $59 million off the income statement in 2006, much of which would have been attributed to the mobile group, says Adobe Vice President Mike Saviage.

Its enterprise and developer unit, which includes server products, though, is much larger and is the company's fastest-growing division, contributing $189 million, or 7% of total revenue, last year.

Accounting issues aside, the arrival of Apple's iPhone raises the possibility that Adobe, a longtime Apple partner, could strike a telephony-oriented deal with Steve Jobs and his new-found teammates at AT&T's ( T) Cingular operations. For now, neither company will, publicly at least, speak to that possibility. But Adobe already has teamed up with Verizon Wireless ( VZ), and flash technology is the centerpiece of that alliance.

Even if Apple turns elsewhere for help, other carriers will be forced to ramp up their smartphone efforts, and developers will write applications for the devices. That brings up yet another potential revenue stream: developer tools for flash, sold by Adobe's Creative Solutions unit.

In a note to clients published this week, Bank of America analyst Daniel Cummins said the smarter smartphones likely to appear in the wake of the iPhone will strengthen the movement of applications to mobile platforms. And that, he said, will not only benefit Adobe, but companies such as Salesforce.com ( CRM), which develops nimble, Web-based business applications, and NeuStar ( NST) a provider of clearinghouse and directory services to the global communications and Internet industry, could benefit.

"Most anything competitively disruptive in telco is good for Neustar, but in the short-term the impact should not be material," Cummins wrote. Bank of America has investment banking relationships with Adobe, Apple and Salesforce.com.

And as my colleague Alexei Oreskovic pointed out, the various features within the iPhone, from Wi-Fi capabilities to a digital camera, mean there are plenty of specialized chips crammed inside the thin device. Though it's still unclear which companies are providing the silicon inside the iPhone, investors appeared eager to place bets on the most likely candidates.

Within a half-hour of Jobs' first words about the iPhone during his speech at the MacWorld conference in San Francisco, shares of various chipmakers took flight . They included Marvell ( MRVL), RF Micro Devices ( RFMD) Atheros Communications ( ATHR) and Maxim Integrated ( MXIM).

Kagermann's Wild Ride

SAP ( SAP) usually presents an imperturbable face to the world. But things got a bit, well, perturbed this week as word of a potentially nasty succession struggle leaked out and the German business software maker warned of a disappointing fourth quarter .

For now it looks like CEO Henning Kagermann, who is approaching retirement age, will stay -- at least through 2008. But JMP analyst Patrick Walravens says a number of critical top-level personnel moves may be in the offing.

Bill McDermott, the highly regarded boss of SAP America, may step up as co-head of global sales and service. That's good news for the hard-driving McDermott, but with U.S. growth slowing, his elevation could take even more of the luster off of SAP's star business unit.

Moreover, Leo Apotheker, the current president of customer solutions and operations, eventually may move up to a co-CEO role with Kagermann. "It is unclear to us what such a move would mean for Shai Agassi, the president of the product and technology group. Our due diligence suggests there has been some tension between Agassi and Apotheker over the past year," Walravens wrote recently. He and his company have no financial relationship with SAP.

Sound like speculation? Sure, but Thursday's miss was the second poor quarter of the last three.

As you'd expect, the stock took a 10% hit right after the intraday announcement, but recovered Friday, gaining $1.51, or 3%, to close at $50.01. Even so, that represents a loss of 7.6% over Wednesday's close, and the move bears a bit of examination, says ICAP software analyst Richard Williams, who also has no financial relationship with SAP.

"A whole class of investors have bailed out of the stock on Thursday ," says Williams. Who jumped ship? The momentum players who have been buying since late summer.

Meanwhile, "growth and value investors" looked at the discount and jumped back in. But because the company's announcement was sparse on details, the expected earnings call on Jan. 24 takes on even more importance than usual. If SAP's problems look serious and ongoing, as Williams believes, watch out.


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