Adobe Systems Profit Fall 29% in First Quarter

Shares of Adobe Systems ( ADBE) were up slightly in the premarket, after the company reported first-quarter profit that fell to $156.4 million, or 30 cents per share, compared to $219.4 million, or 38 cents per share, a year earlier.

The company said sales dropped 12% to $786.4 million, as the slow economic activity put a damper on sales of Creative Suite 4, the latest version of the software package that brings in the bulk of Adobe's revenue.

Looking ahead, management is forecasting second-quarter EPS of 31 cents to 38 cents per share, around the consensus of 35 cents.

Shares have been cut more than in half since hitting 52-week highs of $44 a share in May. If the stock does continue to weaken, the next major level of technical support is near the $13-$15 level.

If the shares can firm up and move higher, we see overhead resistance at the $27-$30 levels. We do not currently rate this non-dividend paying stock, but do follow the name closely.

Adobe Systems does not currently pay a dividend.

PSEG Reaffirms 2009 Profit Outlook

Public Service Enterprise Group ( PEG), also known as PSEG, affirmed its 2009 profit outlook Wednesday, saying that its balance sheet remains strong.

The Newark, N.J.-based company, which supplies natural gas and electric power service to many Northeastern and Mid-Atlantic states, reaffirmed its earlier guidance of full-year 2009 profit of $3.00 to $3.25 per share.

These expectations are in-line with Wall Street predictions. On average, analysts expect full-year 2009 net income of $3.07 per share. Back in February, PSEG lowered its previous 2009 profit forecast of $3.05 to $3.35 per share.

Shares of PEG were mostly flat in morning trading Wednesday.

We have avoided shares of PEG since our early June coverage began, when the stock was trading at $44.40. The company has a 5.05% dividend yield, based on last night's closing stock price of $26.33.

The stock has technical support in the $20-$22 range. If the shares can stabilize, we see overhead resistance around the $31-$33 levels. We would remain on the sidelines for now.

Public Service Enterprise Group is not recommended at this time, holding a Dividend.com rating of 3.3 out of 5 stars.

Darden Restaurants Crushes Shorts on Bump Up in 2009 Forecast

Shares of Darden Restaurants ( DRI) were up nearly 17% in early trading after the restaurant chain lifted its 2009 profit guidance above Wall Street analysts' estimates.

The chain that is behind such brands as Olive Garden and Red Lobster sees 2009 EPS results coming in 15 cents to 20 cents higher than analysts have been anticipating. Management expects sales growth of between 9% and 9.5% for the year, despite forecasting a same-store sales drop to between 1.25% and 1.75%.

The euphoria in today's rise may also be tied into options expiration and some traders getting caught leaning the wrong way.

We removed shares of DRI from our "Recommended" list back on Aug. 26, when the stock was trading at $32.26. The company has a 2.68% dividend yield, based on last night's closing stock price of $29.90.

The stock has technical support in the $23-$25 price area. If the shares can continue today's run-up, we see initial overhead resistance around the $37-$40 price levels. We will be looking at the shares closely for a potential upgrade.

Darden Restaurants is not recommended at this time, holding a Dividend.com rating of 3.4 out of 5 stars.

Hudson City Bancorp Bad Loans Increasing, but Expects Profit

Hudson City Bancorp ( HCBK) said Wednesday that its number of bad loans increased by 33% in January and February, but the company still expects a first-quarter profit in-line with analyst expectations.

The Paramus, N.J.-based banking company said that its nonperforming loans as of Feb. 28 totaled $288.6 million, or 0.96% of total loans. At the end of 2008, the company reported bad loans totaling $217.6 million.

Despite this increase in nonperforming loans, Hudson City said that Wall Street expectations of first-quarter net income of 25 cents per share are "reasonable."

The negative effects of the company's nonperforming loans have been offset by a 66% rise in mortgage lending during the January-February period, during which it saw $646.9 million of loan originations, up from $389.4 million in the year-ago two-month period.

During the same period, Hudson City also saw net deposits increase $1.26 billion, or 6.8%.

Hudson City also said that it has no plans to cut its dividend.

We removed shares of HCBK from our "Recommended" list back on Jan. 9, when the shares were trading at $14.63. The company has a dividend yield of 5.19%, based on last night's closing stock price of $10.79.

The stock has technical support at the $10 price area, and below that, $8. If the shares can firm up, we see overhead resistance at the $14.50-$16.50 levels. We would remain on the sidelines for now.

Hudson City Bancorp is not recommended at this time, holding a Dividend.com rating of 3.2 out of 5 stars.

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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.

Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.