Setting up to buy ADBE

Posted on September 26, 2005 , filed under Stocks | Print This Post

ADBE, Adobe Systems Incorporated (ASI) offers a line of software and services for public and private sectors worldwide. It operates through four segments: Creative Professional, Digital Imaging and Video (DIV), Intelligent Documents, and OEM PostScript and Other (OPO). Adobe is famous for providing industry standard software products for the graphic design industry worldwide. Their products include Adobe Photoshop, Adobe Illustrator and ownership over the PDF system. Adobe is in the process of acquiring Macromedia to strengthen its product portfolio. By acquiring Macromedia, Abobe has basically created a digital design monopoly that spans between traditional print and online design. The market has reacted adversely to Adobe’s acquisition sending the stock price down. I think short term speculation over the Department of Justices approval of the acquisition will send Adobe’s stock price down further. Adobe and Macromedia’s products enjoy little overlap. Macromedia is well known for its Flash software products, Dreamweaver and backend software tools. Long term Adobe faces no competition.

I see two situations panning out.
If Adobe’s acquisition fails, I see the stock going back to low 30′s.
If Adobe’s acquisition goes through, the company will have created a larger monopoly over a portion of the design industry.

At today’s prices it appears that investors will win either way. My target buy price for ADBE is $25. My target sell price for ADBE is $40 in 6-12 months and $50 within 1-2 years.

Add this post to your favorite social networking site