Adobe to buy Macromedia

http://news.com.com/Adobe+to+buy+Macromedi..._3-5674501.html

Computer document company Adobe Systems said on Monday it agreed to buy multimedia software firm Macromedia for about $3.4 billion in stock, a move designed to extend its lead in the market for creating and distributing digital documents.

Adobe, best known for its Acrobat document-sharing software, said the deal would help it meet rising customer demand for audio and video options that are compatible with hand-held devices.

Macromedia also gives Adobe access to the dominant animated graphics software on the Internet and which is also aggressively expanding into mobile phones.

The deal is the latest move in the long-anticipated consolidation of the software sector. It was initially welcomed by industry-watchers.

"Management is quite capable, but I think it is quite a big deal to be swallowing," said Robert Sellar, a technology fund manager at the UK's Aberdeen Asset Management, which owns Adobe shares. "$3.4 billion is a lot of money to be spending but (Adobe) are hugely cash generative."

The deal, set to close in the autumn, would likely yield cost savings, said Adobe Chief Executive Bruce Chizen without giving further details.

Adobe said it was unable to provide any estimates on future earnings under generally accepted accounting principles (GAAP) due to uncertainty over restructuring costs related to the deal, but it said it would be break-even to slightly accretive to earnings in the first 12 months on a non-GAAP basis.

Under the terms of the deal, Macromedia shareholders will get 0.69 share of Adobe, worth $41.86 at Adobe's closing price of $60.66 on Friday on Nasdaq, for each Macromedia share. That is a 25 percent premium to Macromedia's closing price of $33.45 on Friday, also on Nasdaq.

Chizen will stay in his position as CEO, Adobe said, while Macromedia President and CEO Stephen Elop will become president of worldwide field operations at the combined company.

At the same time, Adobe said second-quarter earnings and revenue would be toward the high end of previous guidance due to strong demand for Acrobat -- more or less in line with analysts' estimates.

In March, the company said it expected earnings per share between 51 cents and 55 cents and revenue of between $475 million and $495 million. Wall Street is expecting earnings of 54 cents per share, on average, according to Reuters Estimates, and revenue of $489.8 million.

Separately, Macromedia said it expected net revenue for the fourth fiscal quarter, ended March 31, to exceed the $108 to $113 million guidance it provided in January. Analysts are expecting revenue of about $111 million.

Adobe also announced a $1 billion stock repurchase program to start after the Macromedia deal has been completed.

Story Copyright © 2005 Reuters Limited. All rights reserved.

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The Adobe suite is going to go in some very interesting directions with Macromedia applications involved.

[sarettah]

Hmmm... Flash integrated into imageready and photoshop would be sweet

[Newton]

More like flashcast and more

[Trev]

I can see nothing but good things for developers, should make for some interesting times ahead

[Newton]

Given that macromedia is progressing with flashcast and flash lite for mobiles, with flash being a very suitable application to run with streaming tv and beyond, it does make sense. Adobe bought out Aldus years back who owned pagemaker and their only competitor was Quark at the time which as you may or not know is page layout for print. With Adobe having bought them out and having the pdf side of the print world, it makes sense for them to buy out macromedia and complete the cycle, publishing on mobiles starts

[Inabon]

Originally posted by Trev@Apr 18 2005, 10:36 AM
I can see nothing but good things for developers, should make for some interesting times ahead

yes if this deal goes through i only hope they develop the merger of both platforms. that would rock.

[Dravyk]

Talk about forward thinking, does anyone else remember Adobe's roots were in nothing but fonts?! To be a simple font foundary and take things to where they are today is amazing for a company. You never hear of any of their font rivals from 30 years ago even existing in any way today. That's what I call adaptability.

[Trev]

Originally posted by Inabon+Apr 18 2005, 07:10 PM-->