Adobe shares fall on cut in forecast after weak Europe outlook

Adobe shares fall on cut in forecast

SAN JOSE, Calif., Wed Jun 20, 2012 – Shares of Adobe Systems Inc. fell more than 7 percent in early trading after the Photoshop software maker cut its full-year revenue outlook on weakness in Europe, and a shift to a subscription model slows growth.

The company said on Tuesday it expects third-quarter sales at its unit that produces the Creative Suite design software to decline from second-quarter levels.

Analysts say the company’s shift to subscriptions from a licensing model might reduce the revenue upswing it usually sees after the launch of a software upgrade.

Adobe launched its Creative Suite 6 – which includes Photoshop, Illustrator, InDesign, Flash and Dreamweaver – and the Web-based Creative Cloud product in the second quarter.

“The problem with this strategy is that it will take Adobe around four years to generate the same level of revenues from a single subscriber that it would have earned through the sale of a single perpetual license,” Nomura analyst Rick Sherlund wrote in a note.