Friday, December 15, 2006

Adobe's Other Relationship with Google

Adobe (NASDAQ:ADBE) released earnings and held their conference call. (Transcript available on The running commentary and pre-open trading seems to be highly positive. Adobe seems to be on the march.

An interesting question was posed by Steve Ashley of Robert W Baird regarding the monetization of download revenues through Google. Currently the number seems to be buried in the “other revenue” category which is up $72 million. Shantanu Narayen President and CEO responds by saying the deal is confidential and that they cannot say more about that category.

If this becomes significant Adobe will have to lift the corporate veil and let everyone know what a good job they have done. Thinking speculatively Google (NASDAQ:GOOG) is on the march itself and may view a relationship with Adobe as an ends to a means such as overtaking Microsoft (NASDAQ:MSFT)

Relative market caps show Adobe at $24 Billion, Google at $148 Billion and Microsoft at $296 Billion. Google needs something like Adobe. Microsoft does not have the same perspective. Watch the other category at Adobe. Will it become a bear hug or just another strategic relationship?