Another day, another company, another round of layoffs. This time it's the software giant Adobe Systems Inc. which has decided to prune its workforce, while issuing preliminary results for its fiscal fourth quarter and a sales outlook for the first quarter that fell short of expectations.
The San Jose, California-based company said preliminary results for the fiscal fourth quarter ended 28 November show revenue of between $912 million and $915 million, below the $925 million to $955 million it was targeting. However, earnings per share were between 45 cents and 46 cents, up from 38 cents a year earlier. Excluding special items, earnings per share were between 59 cents and 60 cents, well above the 51 cents Wall Street analysts had expected.
Adobe also issued lower guidance for the current quarter, predicting revenue between $800 million and $850 million, down from $890 million in the year-earlier period and well below the $931 million that Wall Street analysts were expecting.
The imaging and design software maker plans to lay off approximately 600 employees, or about 8 per cent of its global headcount, resulting in charges totaling between $44 million and $50 million, most of which will be taken in the company's November quarter. Adobe has been cutting costs, which is one reason it was able to increase earnings per share despite the drop in revenue, CFO Mark Garrett said.
"The global economic crisis significantly impacted our revenue," Adobe CEO Shantanu Narayen said in a statement. He said that the revenue shortfall was due largely to weaker-than-expected sales of Adobe's Creative Suite 4 package, which includes widely used software like Photoshop. The company released the new software in October, but customers haven't upgraded to it at the same rate as for past releases.
Creative Suite is normally a highly anticipated product for Adobe, as it combines a number of the company's software products into a single package and commands relatively high prices. But this year, sales have been slow. "We are experiencing what the whole world is experiencing," Narayen explained.
Shares of Adobe fell more than 9 per cent in after-hours trading yesterday following the earnings announcement, to $20.39. The company is expected to report full fourth-quarter results on 16 December.