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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Judy who wrote (7411)	3/27/1998 1:00:00 PM
From: Chris	Read Replies (1) \| Respond to of 42787

Stock of the Day (Archive) Mar 27, 1998 Adobe Systems (Nasdaq:ADBE - news) just reported earnings after the close on Thursday and the software company missed its number by a country mile, earning $0.33 per share vs the consensus estimate of $0.44. Adobe blamed continuing weakness in Asia, a drop in Macintosh-platform revenues, a slowdown in North America, and a lack of new products last quarter. They forgot to mention El Nino and the lunar eclipse, but otherwise they covered it pretty well. The stock traded up 3-5/8 on Thursday prior to the news, but in after-hours trading Adobe fell more the 5 points. Now it will be interesting to see if shareholders are tiring of Adobe's bumpy ride of the past two years or instead are looking for signs that all the bad news is priced in. Adobe helped launch the desktop publishing boom of the eighties and now it is trying to harness the bucking bronco of the nineties - online publishing. Online publishing is a bucking bronco because it's powerful and exciting, but no one seems able to ride it for more than eight seconds. As the third largest software vendor, Adobe Systems makes products that "help people express and use information in more imaginative and meaningful ways, across all print and electronic media," so say the press releases. The essence of that fancy statement is Adobe products turn computer files into sharp-looking print and online documents. Adobe's PostScript was the homerun of desktop publishing. Adobe Photoshop and Illustrator are graphics editing software that bridge the print and online media. Adobe PageMill and SiteMill are for the creation and maintenance of web sites, and Adobe Acrobat is software that formats and displays electronic documents (tax forms, as an example) for applications such as the web. Adobe's dominance in desktop publishing made it well positioned to establish a strong market position in the online publishing arena, but a few stumbles coinciding with the near-demise of Apple have made for a rough couple of years. The troubles which emerged in late-1995 included a botched acquisition of Frame Technology, which hurt profits and tarnished Adobe's reputation with investors for delivering on expectations. There was also some disappointment that Adobe's Acrobat reader didn't establish a ubiquitous presence on the Web. Although Acrobat is a plug-in application for Netscape's Navigator web browser, it is not being used to the extent that proponents had hoped. The company has such a prominent position in desktop publishing and its products are so familiar to Macintosh users that many investors figure it will eventually establish a strong presence in Internet software and across all platforms. Last year the company outlined its Internet strategy "to provide tools for creating web content, delivering web content, and viewing web content" and made important strides in hitting Windows-based PC users by releasing new versions of software simultaneously for both platforms. In fact, sales of Windows-based products surpassed Mac products for the first time last year. As of this latest quarter, sales of Windows products rose 18% to account for 59% of platform-dependent revenues. Sales on the Mac side plunged 36% and accounted for just 41% of revenues. Adobe says it plans a series of new product releases throughout the rest of the year, which should get revenues back on track. The growth outlook for Adobe Systems hinges greatly on whether its Internet products become a hit. If they do, the size of the market is expected to be so huge that it could easily return the company to its glory days. The difference between a hit and a miss is vast, though. Adobe will also have to prove that its association with Apple isn't a bad thing, assuming it continues, and that its products can continue to make headway in the Windows market where its brand is not well-established. All this gives the stock a relatively high risk/reward profile for investors to consider.

To: Judy who wrote (7411)	3/27/1998 1:56:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 42787

I am working on my tape reading. Did you see that much of the block trading was done in the morning? And the afternoon pegged most of the price gains? Also there were points in time where the blocks that did trade should of moved up the price of the stock but did not, and at other times where there was no large block activity, the price moved up in a short period of time. The more I think about this, the more I am beginning to believe that the MMs had their hand in helping the price move up. Also there were many instances where it was difficult to tell if there was a sale or a purchase of stock. I would like Papyrus to include the bid and ask at the time of the print to tape. I was sceptical of this breakout and knew that it can turn out to be short lived. I hope I communicated that much to you in my post. Ordinarily I would not of been anticipating a pullback given the volume for that day, but in this case I had different thoughts. I just thought the uptrend would lasted at least through part of today if not into the next. But I see the earnings report came out at the end of the day yesterday. Shows you how much I trade stocks for day to day profit making, or trade on earnings. Next time I will look at the time of the day of the earnings release. Silly me. So this means that the stock was moving up on anticipation of good news which IMO was ill-advised purchasing considering the developing fundamental and technical picture of the industry. When the bad news came out, the stock naturally dropped leaving large block customers still exposed. Have you noticed that when a sector is under distribution for a period of time, toward the end there will be unusuall price gains in some stock issues that attract attention? This can attract temporary speculative interest back to help support a selloff. I do not know if this is artificially induced (encouraged) event or a real type of event that is an outcome of the natural speculative interests in the market. Do you have any thoughts on this? This has definitely turned into a learning opportunity for me...which did not cost me anything. Bob Graham