Election Section

Adobe to cut 5% of work force, lowers revenue, quarterly earnings targets

By May Wong The Associated Press
Wednesday October 31, 2001

SAN JOSE — Adobe Systems Inc. will lay off about 150 people, or about 5 percent of its worldwide work force, and lower its revenue and earnings targets for the current quarter and fiscal year 2002. 

The desktop publishing software maker said Tuesday it expects revenues for the fourth quarter ending in November to range between $275 million and $285 million, down from its previously lowered target of between $310 million and $320 million. 

Earnings per share for the quarter is now expected to be 20 cents to 22 cents, the company said. 

Before the announcement, Wall Street analysts were expecting the San Jose-based company to earn 26 cents per share for the quarter, according to Thomson Financial/First Call. 

“This is a much tougher year than we certainly expected,” Adobe chief executive Bruce Chizen said at the company’s fall financial analyst meeting. “There isn’t as much revenue and not as much revenue growth as we have anticipated.” 

Chief financial officer Murray Demo cited continued weakness in Japan and the United States. Sales also slowed after the Sept. 11 attacks, making October the weakest month of the fiscal year for Adobe, he said. 

Chizen remained bullish on the company’s long-term growth opportunities but said the outlook for next fiscal year 2002 “will be as it as today — weak.” 

The company expects to incur up to a $10 million restructuring charge from the layoffs, which will start this week and continue over the next few weeks. 

Out of respect for its employees, the company said it was postponing a groundbreaking ceremony for a third office tower. The event was to take place Wednesday. 

Construction of the new building, however, will continue as planned, the company said. 

Shares of Adobe fell $1.59, or more than 5 percent, to $28.75 on the Nasdaq Stock Market. In extended trading, the stock plunged $4.70 to $24.05. 

The company plans to release its fourth-quarter results on Dec. 14.