Adobe’s Stock Drops 19% on Disappointing Forecast

Shares in Adobe, Inc. dropped like a rock Wednesday following the company’s earnings report on Tuesday. Adobe turned in record results for its third quarter, which ended September 3rd, but guidance below Wall Street forecasts for the 4th quarter got analysts hot and bothered, leading to today’s selloff.

The stock closed at US$26.67, down $6.27 (-19.03%), on very, very heavy volume of 108.7 million shares, 8.5 times average volume.

The company reported record revenue of $990.3 million, and that compares to only $697.5 million in the year ago quarter, a 42% year-over-year jump. Earnings per share came in at $0.44 ($230 million), up 59% over the third quarter of 2009’s EPS of $0.26 ($136 million).

It’s the guidance that will sometimes do a company’s stock in, or at least lead to it taking a hit, and such was the case for Adobe. For though the company had a stellar third quarter, it guided for revenues of $950 million to $1 billion just under current Wall Street estimates of $1.03 billion.

That and worries that CS5 sales aren’t as robust as had been expected lead to UBS, Credit Suisse, and Bank of America all downgrading Adobe to “Neutral.”