This Software Giant is Flying High

Anupriya is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Adobe Systems Inc (NASDAQ: ADBE) reported its phenomenal fourth quarter ended results  bringing good news for the investors .This software manufacture company successfully completed the transition of its traditional software package into a cloud based subscription service at a cost of $94 million. Both, casual and professional users stand to benefit through this progress and the CEO of Adobe Mr. Mark Garrett assures investors that this step will be pivotal in the long run.   

Figures in the picture

Adobe reported an operating income of $1.15billion increasing by 6.5% compared to the last year quarter. Earnings per share increased by 28% coming up to $0.61 per share much higher than the S&P expectation of  $0.56.The overhead expenses decreased by 6.8% while the operating margin increased by more than 5%. The cloud based software suite increased demand by 25% compared to the third quarter and the customers are enjoying the benefit of having access to the latest applications coupled with convenient pricing option. Paid subscriptions escalated to 326000 including about 1 million free trial users.

Others in the market

Apple (NASDAQ: APPL) with its newly launched iPhone 5  created quite a stir in the market initially but demand has been on a sharp decline lately. Its tiff with Samsung over patent issues also reached a status quo when the latter was just forced to pay a hefty compensation. With Samsung smart phones still in the market Apple continues its struggle for market dominance. One of the hidden cost advantages that Apple enjoys is that even without major advertising expenditure it has one of the most effective marketing techniques. Expense on media Buzz and product promotion is much lesser for Apple            compared to its peers.

Microsoft (NASDAQ: MSFT) has exhibited a growth rate of over 9% and has a dominant presence in the PC  market share. To expand in the  mobile market Microsoft has even partnered with Nokia(NYSE: NOK) to drive windows phone 8.Microsoft has tremendous growth potential and favorable cash flow and it pays a handsome dividend of 3.5%. Therefore it can be a safe bet for investors in the long run giving stiff competition to Adobe.

Well played strategies

The cloud based software offered by Adobe is expected to rake in almost $4.1 billion in the coming year. In addition to this Adobe introduced digital marketing services known as Marketing Cloud which provides data mining services to streamline business activities enhance product offering and manage business traffic through social media sites. Adobe’s strategic acquisition of Efficient Frontier will further enhance the marketing cloud endeavor.  As a part of Creative cloud subscription Adobe has released Adobe Scout, Flash C++ compiler to market flash games. The company ventures into the video ad market with Adobe Media weaver and has also introduced the primetime Media Player to reach audiences across the web.

 

 

Going rock steady

Adobe with its crisp strategies and stellar performance is climbing the ladder of success with elan. Promising projects on the cards and steady growth make this stock noteworthy. Adobe has been incredibly innovative and outperformed the tech market by a huge margin. Weak demand in Europe and fierce market competition seem to be a potential hurdle but Adobe has multiple strengths to overcome them with ease. Therefore I am very optimistic about this stock and would recommend a comfortable Buy for this one.


anupriya123 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple, Adobe Systems, and Microsoft. 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!

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