Adobe reported over a 50 per cent drop in income for the fourth quarter of its latest financial year.

The 50 per cent fall is in comparison to its income in the same quarter last year. Echoing common industry experience, Adobe blamed weak demand reflecting budget cuts worldwide.

The company's net income was $34.3 million, down from $79.2 million in the year-ago quarter. Revenues were $264.5 million, compared to $355.2 million.

Targets Adobe CEO Bruce Chizen confessed "disappointment" with the results, which were below company targets. He added: "We have maintained or gained market share in our major markets.

"The weak global economy is having a major impact on our business. Until corporations begin to spend more marketing dollars, this negative impact on creative professionals, and Adobe's products, will remain.

"Despite ongoing weakness in the global economy, Adobe continues to generate outstanding profit margins. In fiscal 2001, Adobe delivered a pro forma operating margin of 33 per cent for the year."

Lay-offs During the fourth quarter, Adobe reduced its work force by 247 employees and reported a restructuring charge of $12.1 million, which was reflected in its earnings Thursday. Adobe also began offering Mac OS X-compatible products.

The company achieved 41 per cent annual growth in its Acrobat business. Chizen remarked: "Adobe is driving the transformation from paper-based processes to electronic workflows."

Adobe reported revenue of $1.23 billion for the year, compared to $1.27 billion in the prior year. Full-year net income was $205.6 million, compared to $287.8 million in fiscal 2000.

Looking ahead, Adobe said it expects revenue for the first quarter of 2002 to come in between $265 million and $280 million. Earnings per share in the first quarter will be $0.20 to $0.22 per share. Prior to the guidance given Thursday, analysts polled by Thomson Financial/First Call had expected Adobe to report adjusted earnings per share of $0.23 on revenue of $292 million.

The company plans to spend 20-21 per cent of its revenues over the next year on research and development, 34-35 per cent on sales and marketing and 10-11 per cent on administration.

In related news, Dmitry Sklyarov, the Russian programmer arrested in July for creating a program that allowed users to hack Adobe's eBook Reader software, was freed by the US government in exchange for agreeing to testify against his company for infringing US copyright law.

Adobe shares closed down 3.62 per cent on the days trading at $30.63. Nasdaq lost 3.23 per cent on the day, closing at 1,946.51.