From the SMW archive. Originally published September 22, 2011. This article is preserved as a historical record — facts, figures, and market context reflect 2011.

Adobe Quarterly Sales Forecast Tops Estimates

By Ed Liston · September 22, 2011

Adobe Systems Inc. (NASDAQ:ADBE), the largest maker of graphic-design software, saw its shares rise in late trading after issuing a sales forecast that beat analysts’ estimates.

The move is tied to a quarterly forecast that anticipates rising demand for creative content and digital marketing. In a statement released on Wednesday, the San Jose, California-based company said fourth-quarter revenue will be $1.08 billion to $1.13 billion, above the $1.07 billion average estimate of analysts. Excluding some items, Adobe forecast profit of 57 to 64 cents per share, against the analyst estimate of 58 cents.

Pacific Crest Securities Inc. analyst Chad Bartley said the forecast should ease investors’ concern that the economic slowdown had dampened customer interest in Adobe’s products. Adobe’s stock has swung sharply this year; the company sells software for designers and photographers as well as programs that help corporate customers manage documents.

Bartley, who rates Adobe’s stock outperform, said there had been concern that the environment was tough and that demand was starting to weaken. The guidance is a strong counter to that view.

Adobe’s shares rose as much as 8.8 percent, or $2.16, to $26.80 in extended trading. Earlier they had closed down 2.5 percent, or 63 cents, at $24.64 on the Nasdaq Stock Market.

Adobe continues to face challenges, including waning support for its Flash technology. Apple Inc. restricts the use of Adobe’s software for web animation and video, and Microsoft Corp. has said Windows 8 will not allow Flash to run in its new Internet Explorer 10 browser, while the version of the browser that runs on the traditional Windows desktop still does.

To close the gap, Adobe is adapting its products to support HTML5, the widely adopted web coding language, alongside Flash. Tools for writing HTML5 software may eventually become part of its flagship Creative Suite, chief executive Shantanu Narayen said in the statement. On a conference call, he added that the company plans to double its investment in the area.

Ed Liston was a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guided an independent team of experienced analysts and wrote for multiple stock trader publications.