"One of our concerns on this name had been that the transition to a cloud business would pressure the company's EPS -- which has now played out as Adobe guided to FY13 non-GAAP EPS of $1.40 versus consensus of $2.35 and is likely to show gradually improving EPS as we move beyond FY13," Walravens wrote, in a note to clients.

"With the estimate cut out of the way, the most painful part of the transition may be behind Adobe, leaving the stock poised to work its way higher as the company benefits from the inherent advantages of a subscription and cloud-based model," he added.

Adobe shares rose over 5% in Friday afternoon trading, putting the company near post-crisis highs and at 2012 share gains in excess of 30%.

The software maker's share gains compare favorably to other notable tech sector turnaround efforts like Hewlett Packard, Dell and Microsoft. They even exceed stock gains of software and services giants like IBM ( IBM) and Oracle ( ORCL), who are widely perceived as adaptive to a fast-changing tech sector.

At the IMN conference, Ubben highlighted Adobe and other large ValueAct investments, like an acquisition hungry Valeant Pharmaceuticals ( VRX), as reason to cut against a general trend of cost cutting across Corporate America. "We're always fighting the last war in this age of austerity. The problem is that like people don't trust the government, they don't trust their companies," Ubben said.

"The scarcity in two to three years is going to be absolute growth... Investors are afraid of capital expenditure, research & development; they just want more buybacks." the sometimes activist investor added, during a panel discussion.

Still, as Adobe may prove, bets on M&A and turnarounds could take time to bear fruit, amid a still-uncertain economic backdrop and an investor focus on short-term earnings.

Adobe's 2013 outlook - which takes account of the EPS hit its Creative Cloud and digital marketing bets may have on the company's bottom line - caused some Wall Street analysts to temper their forecasts heading into the new year.

Credit Suisse analysts cut Adobe's fiscal 2013 revenue and EPS estimates from $4.306 billion and $2.25 to $4.554 billion and $1.60, respectively, and highlighted some skepticism on whether the company can deliver on forecasts of new subscriber adds to its Creative Cloud and digital marketing offerings.

"We remain cautious on Adobe's stock during the transition to a subscription-based licensing model for Creative Suite and as Adobe invests in digital marketing opportunities," the analysts wrote, in a note to clients.

The Credit Suisse analysts also questioned whether Adobe's best days continue to be in the rear-view mirror. "Although we view revenue growth as the main driver of future operating income growth, we also believe that many of Adobe's solutions are maturing, the combination of which would reduce forward revenue and EPS growth as compared to the past decade and, therefore, limit multiple expansion," the analysts added.

Adobe's earnings continue a debate on whether companies deemed to have been left behind in the race from PCs to mobile devices can find second life. They also unequivocally show that predictions of Adobe's Apple iPhone-related demise were unfounded.

Also watch ValueAct's bet on Adobe as a leading indicator of whether similar contrarian growth and merger efforts at the likes of Eaton ( ETN), Walgreen ( WAG), Bed Bath & Beyond ( BBBY) and Starbucks ( SBUX) bear fruit in coming years, amid a consensus of skepticism.

-- Written by Antoine Gara in New York

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