Monday, April 18, 2005

Adobe to buy Macromedia in $3.4 billion stock deal - Internet Software - Computer Software - Internet - Software - Earnings - Company Announcements - M&A

ADBE has been a great performer for our portfolios but it has taken a big hit the past few days. The company is buying Macromedia for 3.4 Billion which works out to 42 times earnings. Not cheap but not too bad for the leader in web design software.

The fit looks very good as Macromedia makes 80% of its revenue from Web design and ADBE only makes 2% from this source. The combination combines two platforms that are leaders--the PDF publishing-printing format and Flash Media. Flash media has been adopted for Samsung Cell phones which is another important consideration. In case you have not heard, TV-Video is coming to a cell phone near you!
INTC finally introduced its first WiMax products today. This wireless system can transmit up to 30 miles in the open country and 5 miles within towns. The world is changing fast. My family will hold ADBE and in fact we may buy more. The stock seems to be over-reacting to the merger. The markets knows that the two companies will not be able to realize quick savings as there is little over-lap in their businesses. The potential to add customers to one another is great.