Adobe Systems announced a company restructuring
that will result in the loss of about 750 jobs, primarily in North America and
Europe.
On Nov. 8, the San Jose, Calif., maker
of content authoring solutions that enable customers to create, distribute and
monetize digital content provided a business update for its fourth-quarter
fiscal year 2011, ending Dec. 2, 2011. Adobe announced plans to further
align its business around the growth categories of digital media and digital marketing
solutions.
Adobe said it is investing aggressively
in digital media and digital marketing, two growing market areas. In digital
media, the company is an industry leader in content authoring solutions,
enabling customers to create, distribute and monetize digital content. In
digital marketing, the company intends to be the leader in solutions to manage,
measure and optimize digital marketing and advertising, Adobe officials said.
An Adobe press release on the moves
said:
"In order to better align
resources around digital media and digital marketing, Adobe is restructuring
its business. This will result in the elimination of approximately 750
full-time positions primarily in North America and Europe. We expect to record
in the aggregate approximately $87 million to $94 million in pre-tax
restructuring charges. Included in these charges are (i) approximately $17
million to $19 million primarily related to the consolidation of leased
facilities and (ii) approximately $70 million to $75 million related to
employee severance arrangements. We expect to record approximately $73 million
to $78 million of these charges in the fiscal quarter ending Dec. 2, 2011."
With about four weeks remaining in the
quarter, the company believes it will achieve fourth-quarter revenue within the
$1.075 billion to $1.125 billion range it previously provided on Sept. 20,
2011, Adobe said.
"We expect to report record
revenue within the fourth-quarter target range we previously issued," said
Mark Garrett, executive vice president and CFO of Adobe, in a statement.
Adobe will hold its 2011 Financial
Analyst Meeting on Nov. 9 in New York. At the meeting, the company plans to
outline the strategy and goals for its business realignment and provide more
detail on what is involved and the reasons behind the restructuring. The
company also will further discuss its digital media and digital marketing
growth strategies.
Adobe's digital media growth strategy
revolves around its recently announced Creative Cloud and will enable the
company to rapidly deliver new product capabilities and services, penetrate
untapped market segments, and increase overall engagement with customers, the
company said.
Key elements of this digital media
strategy include:
- continuing to deliver innovation on PCs through its Creative
Suite software while extending its customer reach through tablet-based touch
apps and cloud-based software delivery;
- shifting resources to support even greater investment in HTML5, through tools like
Adobe Dreamweaver, Adobe Edge and PhoneGap, recently added through the
acquisition of Nitobi;
- focusing Flash resources on delivering the most
advanced PC Web experiences, including gaming and premium video, as well as
mobile apps;
- enhancing digital publishing solutions to empower media companies
to profit through publishing their content to any screen;
- investing in media
monetization, including the large growth opportunity in video advertising,
facilitated by the acquisition of Auditude; and
- extending its
leadership in document services with its Acrobat product line and increasing
its focus on the growing category of electronic contracts and signatures
through the recent acquisition of EchoSign.
Key elements of the Adobe digital
marketing strategy include:
- extending Adobe's position in analytics and
reporting to drive rapid growth in new areas like mobile and social;
- personalizing digital experiences across all digital channels, ensuring that
customers can deliver the most relevant, customized content in real time;
- driving multichannel campaign management, enabling marketers to make informed
decisions about all aspects of a marketing campaign, from search to email to
display advertising; and
- accelerating media monetization solutions for content
publishers by enabling them to segment their audiences and maximize their
advertising revenue, leveraging the company's acquisitions of Demdex and
Auditude this year.
"Our mission is to produce the
world's content and maximize the impact of that content," said Shantanu
Narayen, Adobe's president and CEO, in a statement. "Adobe is doubling
down in the digital media and digital marketing categories, markets rich with
opportunities for innovation and growth."
Moving into its fiscal year 2012, Adobe
will focus its research and development and sales and marketing investments on
these two opportunities. In digital media, the company expects to attract new
customers and increase recurring revenue through its new subscription offering.
Meanwhile, to drive increased digital
marketing bookings, which are recognized as recurring revenue, Adobe said it
will reduce its investment, and expected license revenue, in certain enterprise
solution product lines. These changes will reduce fiscal year 2012 revenue
growth by approximately 4 to 5 percentage points, the company said. As a
result, Adobe expects annual revenue growth of approximately 4 to 6 percent in the
fiscal year. Beyond fiscal year 2012, Adobe anticipates double-digit revenue
growth with an increasing percentage of recurring revenue.
"We believe that by focusing
resources on two large initiatives and shifting our business model, we can
drive faster and more predictable growth in FY2013 and beyond," Garrett
said in a statement.
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