Mark, you're hardcore -- I bailed the day after March earnings release (and the first sign that PC/corporate sales growth was seriously slowing), and I can't get excited to get back in even at these prices. When the CEO fires all his top guys, that should be taken as an indictment of the CEO more than anything -- he picked 'em. I'm a strong believer that the captain has 100% responsibility for everything that happens on his ship. Warnock made identical statements a year ago about getting more involved in day-to-day ops after firing the COO. I guess I should have doubted top management's judgement after they paid 10x revenue, 70x earnings for Framemaker way back when. I've always believed they've had a huge market opportunity to leverage their franchise in prof'l publishing/design into biz world, but I think they've blown the window by being too slow in getting products to market. I was stunned at this year's annual meeting at how Warnock glibly restated the same general goals/timeframes as at last couple of annual meetings -- everything is always a year away -- and of course none of the genteel attendees challenged him in the least. The old saying is to sell when a company builds itself a fancy new headquarters, and I wouldn't have done badly to pay more heed to this. I think maybe Adobe employees have paid more attention to jockeying for corner offices and decorating them than to developing new products this last 2 yrs.
Am a big fan of Apple now -- it seems to have similar opportunities to Adobe's -- proprietary architecture, high switching costs, huge franchise in large niche markets, with opportunity to expand into other areas (consumer now, maybe biz later) -- but Apple now has the one critical ingredient that I believe (in hindsight) has been missing at Adobe -- aggressive management. I wouldn't be surprised to see some major shareholders band together and "encourage" Warnock/Geschke to step down at some point. They strike me as two of the nicest & smartest guys you'd want to meet, but seem to no longer have the energy or inclination to drive the business forward (at least not with anything like the focus, energy and persuasiveness of a Steve Jobs).
Adobe probably will rebound some, but I just no longer have faith in their ability to grow. Getting into biz market is treading on MSFT turf, and Adobe's execution to date seems too slow to make much headway in the face of the (probably) inevitable competitive response from msft.
Anyway, good luck with your investments --
Mike |
