Adobe Restructures, Lays Off 750

Adobe announces plans to restructure the company and lay off about 750 employees in North America and Europe. The company says it will focus on digital media and digital marketing going forward.

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.