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Adobe cuts back SME software investment

Adobe Connect and Adobe LiveCycle sold off as 750 jobs cut

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Adobe will cut 750 jobs and reduce its investment in enterprise software as part of a broader plan to target the fast-growing markets for digital media and digital marketing products, the company announced yesterday.

Adobe will provide details of the plan at a meeting for financial analysts in New York today, it said. Adobe also lowered its earnings outlook for the current quarter, in part to pay for the layoffs.

The changes are part of a restructuring plan intended to increase Adobe's focus on what it called the "exploding growth categories" of digital media and digital marketing. Adobe targets those markets with tools for content creation and distribution, and for measuring results from digital marketing campaigns.

Adobe declined to comment ahead of the analyst meeting on which enterprise products would be affected, or how they would be affected.

"In order to drive increased Digital Marketing bookings, which are recognized as recurring revenue, the company will reduce its investment, and expected licence revenue, in certain enterprise solution product lines," it said in a statement.

Its enterprise products include Adobe Connect and Adobe LiveCycle, as well as web content management software it acquired last year when it bought Day Software. The category doesn't include its Acrobat products, which are part of Adobe's Knowledge Worker division.

The enterprise products generated less than 10% of Adobe's revenue last quarter, far less than its content creation and digital media divisions.

Wednesday's analyst meeting is likely to focus more on Adobe's plans for accelerating growth. It will continue to invest in its Creative Suite products and shift resources to support greater investment in HTML 5, through tools like Dreamweaver and Adobe Edge, it said.

In digital marketing, it wants to grow its analytics and reporting business, especially on mobile devices and social networks.

The job cuts will be made primarily in Europe and North America, Adobe said. It had 9,100 workers at the end of last year, making the cuts about 8% of its total staff.

It expects to record a restructuring charge of $87 million to $94 million in the current quarter, mostly for severance payments. That will reduce its earnings per share to between $0.30 and $0.38 based on generally accepted accounting principles, it said.

Adobe is still on track to meet its fourth-quarter revenue goal, it said, but the changes will reduce its revenue growth in the next fiscal year by 4-5%, to achieve revenue growth of about 6%.

"We believe that by focusing resources on two large initiatives and shifting our business model, we can drive faster and more predictable growth in fiscal year 2013 and beyond," CFO Mark Garrett said in a statement.



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