Lowering Expectations: Adobe's Shares Plunge on Disappointing Guidance


Adobe Systems's (ADBE) fiscal third-quarter earnings beat analyst expectations, but share prices plunged in after-hours trading after the company released lower-than-expected guidance for the fourth quarter.

The company on Tuesday reported that its third-quarter profit surged 69% over the year-ago quarter. Net income for the quarter, which ended Sept. 3, totaled $230.1 million, or 44 cents per share, up from $136 million, or 26 cents per share, a year earlier, the company said Tuesday.

Revenue jumped 42%, compared to the same period last year, to $990.3 million. The growth -- which exceeds analyst expectations of $984.1 million, according to a Thomson Reuters poll -- comes from increased demand for graphics-software programs such as Creative Suite 5, which the San Jose, Calif.-based company launched in April. The company, the largest maker of graphic-design programs in the world, also sells the Reader and Illustrator programs.

But the company apparently doesn't expect its sales to grow as much as as analysts have anticipated this quarter. Adobe forecast revenue of between $950 million and $1 billion for the current quarter, while analysts estimate sales of $1.03 billion. In after-hours trading, shares had fallen 15.7% to $27.76 per share by 8 p.m. Eastern time.