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Adobe growth slows

by on20 March 2012

Expecting new product launches

Adobe said revenue growth slowed as sales of its Creative Suite fell, missing its forecasts. Revenue rose 1.7 percent to $1.045 billion in its fiscal first quarter ended March 2, slightly below the $1.054 billion  Wall Street expected.

Part of the problem is that people are not buying Adobe's widely used Creative Suite because they are waiting to buy two new versions set to be introduced at the end of the current quarter.  These are Creative Suite 6 and a Web-based version of the suite that will be sold via subscription. Analysts are worried that the Web-based subscription service, known as Creative Cloud, could hurt Adobe's financial growth over at least the short term.

Adobe's sales typically surge after a Creative Suite upgrade, but analysts have said the revenue upswing might be smaller than in the past because customers who switch to the new service will not buy their software up front. Company executives said during an analyst conference call they intend to promote the subscription service as the superior offering. They said it could take a while to persuade a significant percentage of its corporate customers to move to the new service.

Adobe expects to post second-quarter revenue of $1.090 billion to $1.140 billion, compared with the average analyst forecast of $1.1 billion.

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