Adobe's Growth In Digital Innovations

Adobe Systems Incorporated (ADBE) shows investors its commitment to long-term digital innovation and growth in revenue. Adobe’s Growth in Digital Marketing is the company’s fastest growing area, making up for a quarter of Adobe's annual revenue. Adobe has expanding profit margins and company strengths that are attractive.

Adobe ranged in a price between $43.44-$44.25 after having opened the day at $43.74 as compared to the previous trading day's close of $43.70. Adobe's total annual revenue is $4.4 billion. Adobe’s main competitor in the software industry sector is Microsoft (MSFT). Other competitors include: Google (GOOG), Apple (AAPL) and Oracle (ORCL).

Adobe’s digital growth strategy is to model after its 2009 acquisition of company Omniture ($1.8 billion). Shantanu Narayen, president and chief executive officer of Adobe stated “In fiscal 2013 we intend to accelerate our pace of innovation, and drive integration between Creative Cloud and Adobe Marketing Cloud.”

Adobe in Q4 FY 2012 added approximately 10,000 Creative Cloud subscriptions per week during the quarter, versus the addition of 8,000 subscriptions per week in the third quarter. About 70 percent of Adobe's digital marketing business comes from the U.S. Adobe's digital marketing business includes: web management, social media monitoring, analytics, testing and targeting, and spend optimization. Video tools also is a growth opportunity.

Adobe Creative Cloud is approximately $2 billion in annual revenue. Adobe Creative Cloud adopted a subscription model this year and has been quickly growing this area of its digital marketing business aggressively to date. Adobe’s Creative Cloud service costs $20 to $50 a month. Adobe expects subscriptions to grow 15 percent per year.

Microsoft
Microsoft Corporation (NASDAQ: MSFT) The company launched its first touch-based operating system, Windows 8 late last year. But Windows 8 could not provide a positive boost to the PC market. Microsoft is way behind its competitors. The company will have to explore ways to recover from the current situation.

The fact that Adobe is more ubiquitous today than Microsoft makes investors believe that Adobe will end up being the appropriate digital marketing platform. For customers who prefer Microsoft, price may be acceptable to running Windows applications however they may be challenged to deliver applications of the future. Adobe is aiming at the next generation of productivity applications, developing the trends that will matter most five or ten years from now.

Google
Google Inc. (GOOG) Google’s stock has ranged in price between $782.93-$792.10. Google has a market cap of $211.4 billion. The company has a P/E ratio of 24.3, above the S&P 500 P/E ratio of 17.7. Shares are up 11.7% year to date. Google’s digital marketing focuses in video remarketing and dynamic retargeting technologies.

Technologies include Google+, Google Analytics, mobile advertising, video ads on YouTube, and Google Adwords. Google has realized that they need to take responsibility for multiple revenue streams for content delivered through their platform, both the end-consumer paying and through advertising.

Apple
Apple Inc. (AAPL) Apple's stock has slumped nearly 40% from its all-time high of just above $700. Apple aims to show consumers and investors innovation is a significant investment to the company. Apple is also expected to launch the iPhone 5S with biometrics sooner rather than later. According to IDC, Apple’s iPad is leading the competition with 22.9 million units shipped in the fourth quarter of 2012.

Adobe reported last month its financial results for FY 2013 which ended March 1, 2013. Adobe achieved revenue of $1.008 billion, exceeding its targeted range of $950 million to $1 billion. Diluted earnings per share were $0.13 on a GAAP-basis, and $0.35 on a non-GAAP basis. Operating income was $98.2 million and net income, $65.1 million on a GAAP basis. Cash flow from operations was $322.0 million. Deferred revenue grew by $80.5 million to $700.0 million.

Investors should continue to watch for Adobe’s long-term investments in digital marketing. The company is a worldwide leader in digital that continues to evolve in its new digital investments, partnerships, product offerings, innovations and competitive strategies. Adobe’s stock has been trading at near all-time highs. Adobe has spent $800 million on acquisitions since Omniture. Revenues are stable and ongoing. Adobe Marketing Cloud has achieved record quarterly revenue of $220.4 million in 2012, which represents 32 percent year-over-year growth. The company has had solid stock price performance, operations and growing profit margins. Adobe is a technology stock to buy.

Adobe operates as a diversified software company worldwide. It offers a line of software and services used by creative professionals, marketers, knowledge workers, application developers, enterprises, and consumers.