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Wall Street Beat: Software vendors offer some good news on sales front

Marc Ferranti | June 25, 2012
Tech finally got a dose of good news this week from enterprise vendors including Oracle and Red Hat, which offered up some solid financial reports even as analysts continued to downgrade forecasts for IT spending this year.

Digital media vendor Adobe also had strong revenue growth, announcing Tuesday that sales for the period ending June 1 rose 10 percent year over year to $1.124 billion. The company credited the results to a successful launch of Creative Cloud and Creative Suite 6, strong Acrobat revenue and 35 percent year-over-year revenue growth in its Digital Marketing Suite business.

However, Adobe also reported a year-over-year slump in net income for the period, from $229 million to $224 million.

And for fiscal year 2012, the company narrowed its annual revenue growth target to a range of 6 percent to 7 percent, compared to its prior target range of 6 percent to 8 percent. "These targets reflect a weaker demand forecast in Europe," it said in a statement.

Despite the good news from at least some of the bigger vendors this week and the upbeat note from Canaccord Genuity, the Europe sovereign debt crisis is bound to cast a pall over sales outlooks for some time.

Gartner on Wednesday lowered its forecasts on global spending on business applications. While the firm had previously predicted a 5 percent uptick this year, it now expects applications spending to rise 4.5 percent from last year's $115.2 billion total.

For its part, Forrester Thursday said that IT spending in Europe will flatten out. "The most likely result is either near-zero growth or economic recession in 2012, depending on the country," Forrester analyst Andrew Bartels wrote.

As Oracle co-President Safra Catz said on the company conference call this week, addressing a question on the macro economy and Europe's outlook: "We have not become economists this quarter, and we don't have any idea what's going to happen."


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