The new year began harshly for Adobe Systems. Shares of the maker of Photoshop, Flash, and other widely used software have dropped almost 8 percent in 2010, after big gains last year, amid speculation that Adobe’s Flash Web-video software will be eclipsed by a competing technology backed by Apple and Google.
Apple has fanned the concern, saying it won’t let videos and graphics created with Flash play on the iPhone or on its upcoming iPad computer, introduced by Apple Chief Executive Steve Jobs in January. Adding to the bearish outlook, some technology executives ask whether Adobe, which has traditionally specialized in software for the desktop, is adapting quickly enough to the emerging mobile computing realm. Adobe’s products “have a lot of competition,” says Carl Bass, chief executive at design software maker Autodesk, which uses Flash to power a Web site that helps consumers remodel homes.
For all the negativity aimed at Flash, Wall Street analysts are surprisingly bullish on Adobe, the world’s No. 5 software maker by market value. No less than 19 of 29 analysts covering Adobe recommend its stock, according to data compiled by Bloomberg. Some analysts dismiss talk of Flash’s demise as overblown, saying that this year’s share decline should be measured against a 73 percent gain in 2009. “Adobe was this darling company that could do nothing wrong,” says Brent Thill, a software analyst at UBS who favors Adobe shares. “Now the king of tech, Steve Jobs, is throwing rocks at them on the playground. This is overdone.”
Another reason for optimism, analysts say, is Adobe’s plan to release a new version of its Creative Suite, which accounts for a majority of its sales, in the first half of this year. Analysts surveyed by Bloomberg expect Adobe’s sales to rise 22 percent to $3.59 billion in…