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Quark abandons Adobe bid

Warnock optimistic as Quark credibility gap saves his skin

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Quark has dropped its bid for Adobe, following general scepticism and widespread user hostility. But the bid was never very credible -- Quark is a quarter of Adobe's size and did not suggest a price other than a premium over the market valuation (implying at least $2 billion would be needed). Nor did Quark sign up a financial organisation to give credibility as to how the money might be raised. It is likely that Quark expected Adobe's share price to drop substantially, making an acquisition more possible, but Adobe's share price has marginally increased since the bid was made. It also became clear at the Seybold conference last month that Adobe users did not welcome a merger. Quark's move was generally believed to reflect its concern over Adobe's forthcoming K2 product, which is designed to compete in the same market as QuarkXpress. John Warnock, Adobe CEO, speaking after his keynote presentation to the SPA meeting yesterday, admitted that Adobe had been slow in downsizing when it found the Japanese market shrinking. He said that Adobe had too many managers, so the focus of staff reductions was to eliminate many of these positions. Referring to the Quark bid, Warnock said that Adobe had received from Quark only the three letters posted on Quark's Web site. Warnock expected Adobe to return to 15 per cent revenue growth, and 25 per cent pre-tax profits, from the next quarter. On the product front, Warnock said in his SPA speech that there was a need for a combined authoring system for paper and the Web. Adobe would be considering technology acquisitions to develop such a product. Yesterday, Adobe announced the beta of ImageStyler for building graphical Web sites for small businesses. ®

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