Skip to main content

Updated from Sept. 10

Adobe Systems

(ADBE) - Get Adobe Inc. Report

was soaring Thursday after it reported third-quarter results that beat guidance and Wall Street estimates. The company offered guidance for the current quarter that was slightly higher than analyst expectations.

In recent trading, the San Jose, Calif.-based network publishing firm was up $3.28, or 9%, to $39.67. The number of shares traded already was higher by half than normal daily volume.

Its results also got it an upgrade to buy from neutral from Merrill Lynch and a boost in full-year earnings estimates from Credit Suisse First Boston.

Wednesday Adobe reported a sharp, year-over-year increase in profit -- saying GAAP net income was $64.5 million, or 27 cents a share, in the third quarter, compared with net income of $47.2 million, or 19 cents a share, in the same period a year earlier.

TheStreet Recommends

Pro forma earnings, excluding an investment loss from Adobe's venture program and a partial reversal of a prior restructuring charge, totaled $66.3 million, or 28 cents a share, in the third quarter. That compares with pro forma earnings of $52.5 million, or 22 cents a share, in the year-earlier period.

Adobe, known for its Acrobat product, reported that revenue rose 12% to $319.1 million from $284.9 million a year earlier.

Wall Street analysts expected Adobe to earn pro forma net income of 25 cents a share on $311.3 million in revenue in the third quarter, which ended Aug. 29, according to Thomson First Call. That was at the high end of company guidance, which was a disappointment to Wall Street when offered by Adobe in June. At that time, the company targeted earnings in a range of 22 to 25 cents a share on revenue ranging from $300 million to $315 million. Pro forma results were not expected to differ materially from GAAP earnings.

For the current quarter, Adobe expects revenue to range from $330 million to $350 million and fourth-quarter GAAP and pro forma earnings to range from 30 cents to 32 cents a share. That's slightly higher than the $332.5 million in revenue and 29 cents in earnings projected by analysts for the company's fourth quarter, which ends in November.

Adobe also said in a press release that it will make several major product announcements Sept. 29 at a customer event in New York. Analysts have been awaiting word on when the company will begin shipping the next version of its Photoshop software, which also is catalyst for other product sales.

The quarter, the first full one in which a new version of Acrobat was on sale, was driven by 62% year-over-year growth in the company's ePaper business, CEO Bruce Chizen said in a statement.

Shares of Adobe declined $1.64, or 4.3%, to close Tuesday at $36.39. Shares bounced up $1.92, or 5.3%, to $38.31 in after-hours trading.