Changing the Creative World
Anubhuti is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Most of us have used applications such as Photoshop and are amazed at the various options these programs offer. Of the numerous software companies popping up every other day, Adobe Systems (NASDAQ: ADBE) is one company that aims to change the world through digital experiences. It provides us with some of our favorite applications that are accessible to every individual.
The company has its softwares running on personal computers and server-based computers, as well as on smartphones, tablets, and other devices. Contents built and optimized with Adobe products are seen everywhere from websites, video games, and smartphones, to televisions, tablets, and most other gadgets. The company emphasizes professional customers that include graphic artists, web designers, and developers, and also helps organizations with their marketing and advertising requirements. The company’s services are reliable and find their usage in mobile applications, graphics designing and publishing, web designing, and also in gaming.
As one of the largest software companies in the world, Adobe reported outstanding fourth quarter results, with an operating income of $1.15 billion that increased by 6.5% compared to the same quarter last year. Earnings per share increased by 28%, coming up to $0.61 per share. The net income for Adobe increased by 28% when compared to the same quarter one year prior, rising from $173.72 million to $222.33 million. Adobe Systems has a market cap of $18.52 billion.
On Jan. 13, 2012, the company completed the acquisition of Efficient Frontier, and in December 2012 the company acquired Behance, which is a leading online social media platform that enables creative minds to showcase and share their work. The company aims at incorporating great community features to its latest project - Creative Cloud: making it an ultimate hub for creative people worldwide. Behance is expected to play a key role in Adobe’s efforts to serve the creative world.
The Creative Cloud service is sold on a subscription basis and includes Adobe’s leading CS6 creative software tools and web-based services.
In the last thirty days, portfolios on Behance powered sites have received over 90 million views, and today there are over 3 million projects hosted on Behance platform. Adding it to the Creative Cloud will accelerate the efforts of Adobe towards an open and collaborative creative community.
Competitors in League
Microsoft (NASDAQ: MSFT), one of the leading companies in the technology industry, is one among the biggest competitors of Adobe. Though Microsoft is a strong buy, it did not seem to make much profit during the last fiscal year. The revenue for the current quarter is estimated to be $21.79 billion, whereas the estimate for the next quarter drops down to $20.83 billion. However, Adobe lags far behind with estimated revenue of $1.02 billion for the next quarter.
Adobe is lagging behind its competitors in terms of EPS and also in terms of the estimated revenue for the upcoming year. Oracle (NYSE: ORCL), being a major provider of enterprise software and computer hardware products and services, holds an average estimated revenue of $11.52 billion for the next quarter. Oracle's EPS is estimated at $0.88, while that of Adobe is $0.35.
Adobe, being one of the leading companies in terms of profitability, enjoys a much higher EBITDA margin than its peers, but sadly the company shows a decrease in EPS trends and needs to have a better approach towards its productivity.
A Better Tomorrow
With increased hopes from the Creative Cloud service and its collaboration with Behance, Adobe Systems is expected to have better statistics in the upcoming year. The company has announced expected revenue of $1.075 billion to $1.125 billion for the fourth quarter of 2012. Promising upcoming projects and steady growth can make its stock noteworthy. Overall, investing in the company appears a decent bet; however, it needs to match up with the competitors.
anubhutiagarwal has no position in any stocks mentioned. The Motley Fool recommends Adobe Systems. The Motley Fool owns shares of Microsoft and Oracle Corp.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!