Earnings Preview: Adobe Systems

NEW YORK (AP) — Adobe Systems Inc. is scheduled to report earnings for the fiscal second quarter, which ended in May, on Tuesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The recession has slowed demand in the past few quarters for Adobe's Creative Suite 4, the newest version of the software package that brings in the majority of the company's revenue.

The software package, which targets professional designers and developers, includes Photoshop, Flash and Web design software Dreamweaver, among other applications. The latest version launched last fall, in the midst of the economic turmoil.

But Adobe has been working on cutting expenses, which is helping mitigate weaker sales. And analysts say that demand for CS4 is improving. In a June 10 note to investors, Jefferies analyst Ross MacMillan said a recent survey by Jefferies "suggests that creative professionals continue to adopt CS4 at a steady pace and there is an increase in the number of individuals that intend to upgrade."

BY THE NUMBERS: Analysts, on average, are expecting a profit of 35 cents per share, excluding items, on sales of $695.1 million, according to a poll by Thomson Reuters.

In March, Adobe forecast second-quarter earnings of 20 cents to 27 cents per share, or, excluding items, a profit of 31 cents to 38 cents per share.

The company expects revenue between $675 million and $725 million.

ANALYST TAKE: "Adobe's strong cost control is likely to come through in the current quarter, as well as for the remainder of this year," wrote Sasa Zorovic, an analyst with Janney Montgomery Scott, in a note to investors. Zorovic rates Adobe "Neutral."

WHAT'S AHEAD: Zorovic is "increasingly focused on the company's next product cycle, with CS5 and the next Acrobat version coming out in the first half of next year."

With customers skipping the current version of Creative Suite due to the difficult economic environment, the analyst anticipates "healthy pent-up demand by the time CS5 is released."

Adobe has not set a release date for Creative Suite 5.

STOCK PERFORMANCE: Shares of the San Jose, Calif.-based company rose nearly 69 percent during the quarter to close at $28.18 at the end of May. The stock has advanced since.