Adobe injected a note of nervousness into the tech investment community yesterday as it set third quarter financial targets at the lower end of some analysts’ estimates and its CEO said a naughty word.

The software vendor said it expects third quarter revenues to come in at $855m to $885m, generating earnings per share of $0.45 to $0.47. This compared to the consensus forecast of $877.9m giving earnings per share of $0.45. Some analysts had banked on EPS of $0.47 on revs as high as $911.75m.

The measured forecast came as it unveiled second quarter sales up 19 per cent on the year to $886.9m, delivering net income up 40.9 per cent to $214.9m. Year to date revenues were $1.8bn, compared to last year’s $1.4bn, with net income up 46.5 per cent to $434m.

While the vendor’s forecast was hardly out of whack with Wall Street’s view, it was still enough to pull its shares down a few per cent.

Adobe’s financial statement did not give much context for the Q3 forecast, but according to Reuters, CEO Shantanu Narayen said that its ability to meet its targets could be hit if the US slowdown gets worse.

"I'm not an economist. All I can do is reflect on what I have seen so far," he reportedly said. "Demand for our products remains strong. (But) we are not immune to a recession."

So, it would appear that delivering results and forecasts in line with estimates is not enough these days. Just saying the R word is enough to give Wall Street’s finest the fear. ®

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