Adobe Revises Q4 Earnings, Cuts 600 Jobs

Written by Ryan Lawler

Wednesday, December 3. 2008 at 06:10 PM EST Post a comment

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Adobe Systems Inc. (Nasdaq: ADBE) revised its fourth-quarter sales forecast and said that it is cutting 600 jobs due to weak demand for the newest version of its Creative Suite.

The company lowered its revenue forecast for its fiscal fourth quarter, which ended Nov. 28, to a range of $912 million to $915 million, from its previous forecast of $925 million to $955 million. The forecast fell well below analyst expectations. Wall Street's consensus forecast was for sales of $930 million in the quarter.

In the wake of the earnings revision, Adobe announced a restructuring program that will reduce headcount by 600, or about 8 percent of its global workforce. The company will take a charge of approximately $44 million to $50 million as a result of the staff cuts, $28 million to $30 million of which it expects to be recorded in the fourth quarter.

The company says that it expects revenues in the first quarter of 2009 to be between $800 million and $850 million, with GAAP operating margins between 26 percent and 28 percent and non-GAAP operating margins of approximately 37 percent to 38 percent.

Investors didn't welcome the news; In after-hours trading, Adobe stock fell $2.04, or 9.05 percent, to $20.50.