Dec 24, 2005

Tough Choices Ahead for Adobe

After the Macromedia merger, CEO Bruce Chizen’s challenge: Keep scoring with the old lines while breaking fresh ground in mobile devices

Source: BuisnessWeek
Written By Sarah Lacy

Adobe (ADBE) Chief Executive Bruce Chizen plans to ring in the new year far from the company’s gleaming silver-and-glass headquarters in San Jose, Calif. If all goes to plan, he’ll be kicking back in Australia with his wife and kids, checking his BlackBerry as little as possible, and taking what he calls a “much deserved vacation.”

Deserved indeed. The straight-talking, charismatic New York native has had some year. Coming off a banner 2004, when Adobe sales grew 28%, he followed up in December, reporting fiscal 2005 growth of 18% — easily beating expectations (see BW Online, 3/21/05, “Adobe Keeps Surprising“).

And there was more good news in December. Adobe finally closed the $3.4 billion merger with Macromedia announced in April (see BW Online, 4/19/05, “Macromedia and Adobe: Finally One”).

DO IT ON TIME. But Chizen had better unwind while he can, because he has a lot to do in 2006. There’s the usual merger integration — reassuring Macromedia devotees that the hipper, more innovative of the two companies won’t lose its edge and convincing key “Macromedians,” as they’re called, to stay onboard. He also has to fill some management slots, including chief financial officer, after recent departures.

And in the fourth quarter, which ended on Dec. 2, Adobe is due to release new versions of its core product, the Creative Suite 3. Analysts are watching closely to make sure the newly integrated engineering teams can deliver a suite that successfully bundles Macromedia’s Web design products like Flash and Dreamweaver with Adobe’s print design products like PhotoShop and Illustrator — and do it on time.

The good news: Adobe and Macromedia are two of the most influential and successful companies in their core businesses of graphic and Web design. They would have to stumble badly to lose there. And that makes up about 70% of the business, analysts say (see BW Online, 4/19/05, “Photoshop and Flash: Potent Combo“).

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