This is a summary of the fourth quarter fiscal 2006 earnings call conducted by Adobe Systems, Inc. (ADBE) on December 14, 2006
Management:
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CEO, Acting CFO Bruce Chizen
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President, COO Shantanu Narayen
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VP, Corporate Controller Rich Rowley
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VP of IR Mike Saviage
Key Investor Issues:
- Revenue increased 34% to $682.2 million.
- Net income was $181.9 million or 31 cents a share, down 16.4% from $156.3 million or 32 cents a share.
- The company repurchased 2.2 million shares at a cost of $81.8 million, as part of share repurchase programs.
Full Year Highlights:
- The revenue was $2.575 billion, an increase of 31% over fiscal 2005 as a result of strong revenue growth.
- Net income was $504.4 million in fiscal 2006 compared to $602.8 million in fiscal 2005.
Fourth Quarter Highlights:
Adobe achieved revenue of $682.2 million, up 33.7% compared to $510.4 million in 2005, reflecting the acquisition of Macromedia in December 2005.
- Net income was $181.9 million or 31 cents a share, up 16.4% from $156.3 million or 32 cents a share in 2006 due to revenue growth.
- Operating expensed increased to $441 million from $288 million in the prior year driven by research and development as well as sales and marketing expenses.
- Cash and cash equivalents amounted to $773 million from $421 million in the prior year.
First Quarter Fiscal 2007 Outlook
- Revenue range of $640 million to $670 million expected.
- GAAP operating margin of approximately 19% to 21% on a non-GAAP basis is anticipated.
- GAAP earnings per share target range of 17 cents to 20 cents per share is expected.
Full Year Fiscal 2007 Outlook:
- Annual revenue of approximately 15% expected.
- GAAP operating margin range of approximately 25% to 27% is anticipated.
- Non-GAAP operating margin range of 37% to 38%.
Key questions and answers from the fourth quarter fiscal 2006 earnings call conducted by Adobe Systems, Inc. (ADBE) on December 14, 2006
Jay Vleeschhouwer:
Do you expect to have more product segmentation than you had to date?
Shantanu Narayen: Moving away from bundles to more integrated suites is one of our objectives, and we will do that with the Creative Suite 3 launch.
Jay Vleeschhouwer:
Can you explain a bit with respect to positioning or pricing around an increasingly discrete or segmented product line?
Bruce Chizen: Photoshop CS3 Extended software, an entirely new version of Photoshop, helps professionals discover new dimensions in digital imaging, harnessing everything in Photoshop CS3 plus groundbreaking tools for 3D, motion graphics, image measurement and analysis.
Jay Vleeschhouwer:
Is it proper to assume that we should see an equal and offsetting rebound in the Mac part of the business by comparison to the weakness we have seen thus far this year?
Shantanu Narayen: Yes, we certainly expect that and consumers will be extremely impressed with the performance enhancements that we have put in place.
