In a struggle to maintain leadership, Adobe announced the restructuring of its business to focus on Digital Marketing and Digital Media. The move cuts hundreds of full-time positions in order to better allocate resources to these areas.
The Bandwagon
Adobe's maintained a solid stake in Digital Media with its content authoring solutions. Now, with the growing demand for Digital Marketing, the company intends to lead with its tools for measurement and optimization.
Going forward, Adobe says it will offer the ability to make, manage, measure and monetize content and applications across all devices. This strategy spotlights the recently announced Creative Cloud, which is based on hosted services (like Adobe Business Catalyst), Social and Cloud-based storage for "everywhere" access.
According to Adobe, important elements of this 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
- Focusing Flash resources on delivering advanced PC web experiences
- Enhancing digital publishing solutions to empower media companies
- Investing in media monetization, including the large growth opportunity in video advertising
- 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
"Our mission is to produce the world's content and maximize the impact of that content,” said Shantanu Narayen, Adobe president and CEO. “Adobe is doubling down in the Digital Media and Digital Marketing categories, markets rich with opportunities for innovation and growth.”
“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,” added Mark Garrett, Adobe executive vice president and CFO.
Restructuring Around Market Demands
In order to align their Digital Marketing and Digital Media endeavors, Adobe is restructuring its business. Sadly, the changes will eliminate approximately 750 full-time positions primarily in North America and Europe.
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The restructuring will incur approximately US $87 million to US $94 million in pre-tax charges for severance arrangements and the consolidation of leased facilities. Adobe expects a whopping US$ 73 million to US& 78 million of these charges to be recorded within the fiscal quarter ending December 2, 2011.
With approximately four weeks remaining in this quarter, Adobe's maintaining a positive outlook. "We expect to report record revenue within the fourth quarter target range we previously issued," said Garrett.
Numerically speaking, that's a fourth quarter revenue within the US 1.075 billion to US $ 1.125 billion range.
Since the announcement, Adobe shares are down 11%.
