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Adobe Q4 profits up on Illustrator 8.0

But future fortunes dependent on increasing Mac sales

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Graphics software specialist Adobe yesterday reported Q4 profits up seven per cent to $50.3 million from $46.8 million a year ago. Revenue for the period rose 8.6 per cent to $246.7 million from $227.1 million in Q4 1997. The company's figures were well ahead of Wall Street expectations, but like so many of Adobe's profit boost were driven by the launch of a new version of a single application, in this case Illustrator 8.0. Adobe's business comes from two key segments: applications like Illustrator and Photoshop, and licensing fees from the PostScript interpreters built into many laser printers. While the former has been hit hard by the shrinking Mac market, the latter has suffered from the Asian financial crisis. Licensing fees fell $7.4 million for the quarter year-on-year from $46.4 million, and as that figure drops, application sales have to grow even faster to maintain the company's overall growth. Fortunately, the resurgence in the Mac market is beginning to show, and this should push Adobe onwards through the coming quarters. That said, Adobe has been pumping R&D dollars into developing a new desktop publishing application, codenamed K2. The company is going to have its work cut out for it fighting the very, very heavily entrenched QuarkXPress. While users will generally welcome the arrival of a solid alternative to XPress -- it's hard to find any DTP operators who claim to really enjoy using it -- whether publishing companies will be willing to take the cost of the switch, in terms of software and training, is another matter. ®

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