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Updated from 5:46 p.m. EDT

Adobe Systems

(ADBE) - Get Adobe Inc. Report

reported third-quarter results Thursday that exceed reduced Wall Street estimates and came in at the high end of the company's lowered guidance provided at the end of July.

The San Jose-based maker of network publishing software also provided targets for the fourth quarter with a high-end that exceeds current analyst expectations.

On a post-close conference call, Adobe executives said business in the U.S., particularly in the education market, rebounded in August, while Europe picked up in the second half of August and weak demand in Asia persisted.

Adobe reported net income of $47.2 million, as calculated by generally accepted accounting principles, or 19 cents a share, in the third quarter, which ended Aug. 31. That compares to net income of $40.3 million, or 16 cents a share, in the same period a year earlier, which included a $39.4 million investment loss charge. Last quarter, Adobe recorded net income of $54.3 million, or 22 cents a share.

Excluding charges, Adobe said it earned pro forma net income of $52.5 million, or 22 cents a share, in the third quarter, compared to $69.1 million, or 28 cents a share, a year earlier and $67.4 million, or 27 cents a share, in the second quarter. The company said revenue declined 2.5%, to $284.9 million from $292.1 million a year earlier and dropped 10.2% from $317.4 million in the second quarter.

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Wall Street analysts expected Adobe to earn pro forma net income of 19 cents a share on $276 million in revenue in the third quarter, according to Thomson Financial/First Call.

"I am pleased that Adobe is reporting revenue and earnings at the high end of our revised third-quarter targets," said Bruce R. Chizen, president and chief executive officer of Adobe. "I am also encouraged that despite a challenging economic environment, we are planning for growth in Q4."

Adobe expects fourth-quarter revenue to range from $285 million to $300 million and pro forma earnings to range from 21 cents a share to 25 cents a share. The consensus estimate on Wall Street falls at the low end of that range, with fourth-quarter revenue expected to come in at $285.2 million and fourth-quarter earnings at 22 cents a share.

Previously, Adobe set preliminary fourth-quarter targets June 13 in the range of $315 million to $345 million for revenue and in the range of 26 cents to 29 cents a share for pro forma earnings.

The new lower targets still represent an increase from a year earlier. The guidance assumes no change in economic conditions but factors in a seasonal pick-up in Europe seen in past years and better sales in Adobe's ePaper segment, CFO Murray Demo said.

With four weeks left in the fiscal third quarter, Adobe, in its intra-quarter update July 31, lowered its revenue target range to between $270 million and $290 million from its previous range of $300 million to $320 million. Adobe also lowered third-quarter pro forma earnings to 18 cents to 23 cents a share, down from the original target of 24 cents to 27 cents. At that time, the company, which makes Acrobat and PhotoShop products, blamed lower-than-expected revenue in July across all of its business segments and geographic markets, with particular weakness in Europe and Japan.

That revised forecast prompted a round of analyst downgrades and sent Adobe shares to their lowest level in three years at the beginning of August.

Shares of Adobe declined 73 cents, or 3.8%, to close Thursday at $18.45. In after-hours trading, Adobe shares shot up to $20.94.