Google has just finished wrapping up their quarterly earnings call, and while the results were good for Google, their earnings are taking a backseat to the other story that they threw in for good measure. As the title above suggests, it’s been formally announced, which you can read in the press release after the break, that Google’s current CEO will step down, and Google co-founder Larry Page will step into the hot seat.

The transition is set to start on April 4th, and Larry Page will officially be taking over Google’s day-to-day operations as Chief Executive Officer. Furthermore, though, Sergey Brin is planning on devoting his efforts to new products, and new products only. Of course, Schmidt is sticking around, and will take up the role of Executive Chairman. He will be focusing his own efforts externally for Google, with deals, partnerships, and adding customers his main priority.

As for any internal time, Schmidt will be acting as an advisor to both Brin and Page. Check out the full press release below for more information.

Press Release

MOUNTAIN VIEW, Calif. – January 20, 2011 – Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter and the fiscal year ended December 31, 2010.

“Q4 marked a terrific end to a stellar year,” said Eric Schmidt, CEO of Google. “Our strong performance has been driven by a rapidly growing digital economy, continuous product innovation that benefits both users and advertisers, and by the extraordinary momentum of our newer businesses, such as display and mobile. These results give us the optimism and confidence to invest heavily in future growth — investments that will benefit our users, Google and the wider web.”

In addition, Google has also announced plans to streamline decision making and create clearer lines of responsibility and accountability at the top of the company.

Starting from April 4, Larry Page, Google Co-Founder, will take charge of Google’s day-to-day operations as Chief Executive Officer.
Sergey Brin, Google Co-Founder, will devote his energy to strategic projects, in particular working on new products.
Eric Schmidt will assume the role of Executive Chairman, focusing externally on deals, partnerships, customers and broader business relationships, government outreach and technology thought leadership–all of which are increasingly important given Google’s global reach. Internally, he will continue to act as an advisor to Larry and Sergey.
Commenting on these changes, Eric said: “We’ve been talking about how best to simplify our management structure and speed up decision making for a long time. By clarifying our individual roles we’ll create clearer responsibility and accountability at the top of the company. In my clear opinion, Larry is ready to lead and I’m excited about working with both him and Sergey for a long time to come.”

Larry said: “Eric has clearly done an outstanding job leading Google for the last decade. The results speak for themselves. There is no other CEO in the world that could have kept such headstrong founders so deeply involved and still run the business so brilliantly. Eric is a tremendous leader and I have learned innumerable lessons from him. His advice and efforts will be invaluable to me as I start in this new role. Google still has such incredible opportunity–we are only at the beginning and I can’t wait to get started.”

Q4 Financial Summary

Google reported revenues of $8.44 billion for the quarter ended December 31, 2010, an increase of 26% compared to the fourth quarter of 2009. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the fourth quarter of 2010, TAC totaled $2.07 billion, or 25% of advertising revenues.

Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

GAAP operating income in the fourth quarter of 2010 was $2.98 billion, or 35% of revenues. This compares to GAAP operating income of $2.48 billion, or 37% of revenues, in the fourth quarter of 2009. Non-GAAP operating income in the fourth quarter of 2010 was $3.38 billion, or 40% of revenues. This compares to non-GAAP operating income of $2.76 billion, or 41% of revenues, in the fourth quarter of 2009.
GAAP net income in the fourth quarter of 2010 was $2.54 billion, compared to $1.97 billion in the fourth quarter of 2009. Non-GAAP net income in the fourth quarter of 2010 was $2.85 billion, compared to $2.19 billion in the fourth quarter of 2009.
GAAP EPS in the fourth quarter of 2010 was $7.81 on 326 million diluted shares outstanding, compared to $6.13 in the fourth quarter of 2009 on 322 million diluted shares outstanding. Non-GAAP EPS in the fourth quarter of 2010 was $8.75, compared to $6.79 in the fourth quarter of 2009.
Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the related tax benefits. In the fourth quarter of 2010, the charge related to SBC was $396 million, compared to $276 million in the fourth quarter of 2009. The tax benefit related to SBC was $89 million in the fourth quarter of 2010 and $62 million in the fourth quarter of 2009.
Q4 Financial Highlights

Revenues – Google reported revenues of $8.44 billion in the fourth quarter of 2010, representing a 26% increase over fourth quarter 2009 revenues of $6.67 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.

Google Sites Revenues – Google-owned sites generated revenues of $5.67 billion, or 67% of total revenues, in the fourth quarter of 2010. This represents a 28% increase over fourth quarter 2009 revenues of $4.42 billion.

Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $2.50 billion, or 30% of total revenues, in the fourth quarter of 2010. This represents a 22% increase from fourth quarter 2009 network revenues of $2.04 billion.

International Revenues – Revenues from outside of the United States totaled $4.38 billion, representing 52% of total revenues in the fourth quarter of 2010, compared to 52% in the third quarter of 2010 and 53% in the fourth quarter of 2009. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2010 through the fourth quarter of 2010, our revenues in the fourth quarter of 2010 would have been $201 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2009 through the fourth quarter of 2010, our revenues in the fourth quarter of 2010 would have been $132 million higher.

Revenues from the United Kingdom totaled $878 million, representing 10% of revenues in the fourth quarter of 2010, compared to 12% in the fourth quarter of 2009.
In the fourth quarter of 2010, we recognized a benefit of $25 million to revenues through our foreign exchange risk management program, compared to $8 million in the fourth quarter of 2009.
Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 18% over the fourth quarter of 2009 and increased approximately 11% over the third quarter of 2010.

Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 5% over the fourth quarter of 2009 and increased approximately 4% over the third quarter of 2010.

TAC – Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $2.07 billion in the fourth quarter of 2010, compared to TAC of $1.72 billion in the fourth quarter of 2009. TAC as a percentage of advertising revenues was 25% in the fourth quarter of 2010, compared to 27% in the fourth quarter of 2009.

The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.74 billion in the fourth quarter of 2010. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $333 million in the fourth quarter of 2010.

Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, increased to $877 million, or 10% of revenues, in the fourth quarter of 2010, compared to $688 million, or 10% of revenues, in the fourth quarter of 2009.

Operating Expenses – Operating expenses, other than cost of revenues, were $2.51 billion in the fourth quarter of 2010, or 30% of revenues, compared to $1.78 billion in the fourth quarter of 2009, or 27% of revenues.

Stock-Based Compensation (SBC) – In the fourth quarter of 2010, the total charge related to SBC was $396 million, compared to $276 million in the fourth quarter of 2009.

We currently estimate SBC charges for grants to employees prior to January 1, 2011 to be approximately $1.6 billion for 2011. This estimate does not include expenses to be recognized related to employee stock awards that are granted after December 31, 2010 or non-employee stock awards that have been or may be granted.

Operating Income – GAAP operating income in the fourth quarter of 2010 was $2.98 billion, or 35% of revenues. This compares to GAAP operating income of $2.48 billion, or 37% of revenues, in the fourth quarter of 2009. Non-GAAP operating income in the fourth quarter of 2010 was $3.38 billion, or 40% of revenues. This compares to non-GAAP operating income of $2.76 billion, or 41% of revenues, in the fourth quarter of 2009.

Interest and Other Income, Net – Interest and other income, net increased to $160 million in the fourth quarter of 2010, compared to $88 million in the fourth quarter of 2009.

Income Taxes – Our effective tax rate was 19% for the fourth quarter of 2010.

Net Income – GAAP net income in the fourth quarter of 2010 was $2.54 billion, compared to $1.97 billion in the fourth quarter of 2009. Non-GAAP net income was $2.85 billion in the fourth quarter of 2010, compared to $2.19 billion in the fourth quarter of 2009. GAAP EPS in the fourth quarter of 2010 was $7.81 on 326 million diluted shares outstanding, compared to $6.13 in the fourth quarter of 2009 on 322 million diluted shares outstanding. Non-GAAP EPS in the fourth quarter of 2010 was $8.75, compared to $6.79 in the fourth quarter of 2009.

Cash Flow and Capital Expenditures – Net cash provided by operating activities in the fourth quarter of 2010 totaled $3.53 billion, compared to $2.73 billion in the fourth quarter of 2009. In the fourth quarter of 2010, capital expenditures were $2.55 billion, which was primarily related to the purchase of our office building in New York City, as well as IT infrastructure investments, including data centers, servers, and networking equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the fourth quarter of 2010, free cash flow was $981 million.

We expect to continue to make significant capital expenditures.

A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.

Cash – As of December 31, 2010, cash, cash equivalents, and marketable securities were $35.0 billion.

Headcount – On a worldwide basis, Google employed 24,400 full-time employees as of December 31, 2010, up from 23,331 full-time employees as of September 30, 2010.

WEBCAST AND CONFERENCE CALL INFORMATION

A live audio webcast of Google’s fourth quarter and fiscal year 2010 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our continued investments in our core areas of strategic focus, our expected stock-based compensation charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2009, and our most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, which are on file with the SEC, and are available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2010, which we expect to file with the SEC in February 2011. All information provided in this release and in the attachments is as of January 20, 2011, and Google undertakes no duty to update this information.

ABOUT NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, and free cash flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures” and “Reconciliation from net cash provided by operating activities to free cash flow” included at the end of this release.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our “recurring core business operating results,” meaning our operating performance excluding not only non-cash charges, such as stock-based compensation, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income plus stock-based compensation. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation so that Google’s management and investors can compare Google’s recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under ASC Topic 718, Google’s management believes that providing a non-GAAP financial measure that excludes stock-based compensation allows investors to make meaningful comparisons between Google’s recurring core business operating results and those of other companies, as well as providing Google’s management with an important tool for financial and operational decision making and for evaluating Google’s own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, stock-based compensation, that are recurring. Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in Google’s business. Second, stock-based compensation is an important part of our employees’ compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.

Non-GAAP net income and EPS. We define non-GAAP net income as net income plus stock-based compensation less the related tax effects. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be a useful metric for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with stock-based compensation. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google’s use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.

Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management’s comparisons of our operating results to competitors’ operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the cash flow statement and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.

The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

Apple will be revealing their earnings during their last quarter, which ended on Christmas Day, next week, and it’s suggested that the company will announce that they’ve sold somewhere in the ballpark of 90 million iPhones throughout the world since its launch in 2007. These estimates were polled by Fortune from 33 different analysts, all of which had a different number to chime in as to how many iPhones Apple sold in their last quarter.

The high number comes from the already high 73.7 million iPhones Apple has sold throughout the world since September, when the company last revealed global numbers. That brought the Cupertino-based company $45.6 billion in additional revenue. Estimates for this quarter range from 14 million, all the way up to 18.35 million. The average seems to be at 15.78 million. And if that is the case, then the iPhone would have sold 89.6 million in worldwide sales, even before it launches on Verizon.

There’s no doubt that when the iPhone 4 launches on Verizon next month, that the sales of the device will sky rocket once again. But, with Apple’s earning call right around the corner, it will certainly be interesting to see how many iPhones the company has managed to move since their last earnings call. Will the company surprise the world again?

[via Fortune]

So, you thought maybe Adobe would go away now that the digital world is moving toward the tablet, yes? That’s crazy talk! Adobe Systems and their massively popular software are being used more than ever, as evidenced by the earnings they’ve posted in this fourth quarter of the fiscal year. This year Adobe notes that their revenue blasted forth 33% over last year, from $757 million in revenue last year to $1.01 billion this year.

Last year at this time, Adobe was posting a loss of $32 million (6 cents per share) – compared that to this year’s fourth quarter at $269 million earned (instead of lost) with 53 cents per share, and you’ve got some very happy stockholders. Adobe says they expect revenue to grow 10% next year, a much slower growth than this year (but a growth nonetheless) owing to a rebound from a financial recession now, and simply a slower year next.

Shantanu Narayen, Adobe CEO, notes that he expects to BENEFIT from the “e-book revolution,” noting how publishers will continue to adopt Adobe’s software tools. Narayen notes that Adobe plans on helping developers who want to make software for tablet computers in the future. Hooray!

[Via USA Today]

Based on our experience with relationships, we’ve learned that it takes two to tango. It also takes two to produce co-branded wares, and with ASUS already withdrawing (respectfully, of course) from the ill-fated Garmin-Asus smartphone partnership, this here is more a formality than anything else. That said, those worried that Garmin would try to loop in another handset maker in order to manufacturer yet another Garminfone that 3.4 people would consider buying can rest easy. In the company’s Q3 2010 earnings, it confirmed that it is “winding down” its smartphone efforts, and rather than continuing on a path to doom and destruction, it’ll be ramping up marketing efforts in the aviation and maritime sectors. As for quarterly results, the company did see net income rise to $279.5 million (up from $215.1 million a year ago), but shares fell as it issued a depressing outlook for Q4 amid weakening demand for standalone PNDs. Hate to say we told you so…

Garmin officially exits the smartphone business, reports mixed Q3 earnings originally appeared on Engadget on Wed, 03 Nov 2010 12:08:00 EST. Please see our terms for use of feeds.

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My, how a year changes things. Q3 2009 was a nightmare for mega-corps in terms of earnings, but things have definitely been on the up and up just 12 months later. After Sony pushed out a glowing quarterly report this morning, rival Samsung has done likewise. The company saw record breaking revenues of ?40.23 trillion ($35.8 billion) as well as profits (?4.46 trillion; $3.96 billion) in this most recent quarter, with Sammy crediting strong semiconductor performance for the bulk of its newfound fortune. A tip of the hat was also given to its mobile communications business, with the outfit moving a staggering 71.4 million phones during Q3 2010 (a 19 percent boost year-over-year). Reports are noting that between five and seven million of those were of the Galaxy S variety, and it’s hoping to sell ten million of ‘em before the close of this year. All that said, the firm isn’t expecting an equally rosy Q4, noting that a strengthening won and heightened price pressures around LCD panels and DRAM could put a damper on skyrocketing profits. So much for taking a day to celebrate, eh?

[Thanks, Rajendra]

Continue reading Samsung notches record profits, aims to sell ten million Galaxy S phones this year

Samsung notches record profits, aims to sell ten million Galaxy S phones this year originally appeared on Engadget on Fri, 29 Oct 2010 19:05:00 EST. Please see our terms for use of feeds.

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Sprint certainly isn’t out of the woods yet, but at least it’s picking up customers from somewhere. The company’s Q3 2010 earnings were ushered out today, and while its stock fell around ten percent on the news, a few silver linings were present. The carrier saw postpaid subscriber losses of 107,000, but that’s an 87 percent improvement compared to Q3 2009. The CDMA network added approximately 276,000 postpaid customers during the quarter, 471,000 (net) prepaid subscribers and 644,000 total wireless subscribers from a net perspective. It also landed its second best postpaid churn result ever, but the bottom line still looks battered — the operator announced a net loss of nearly a billion dollars ($911 million, if you’re scouting specifics). Of course, phasing out iDEN should probably help things in the long run, but even its 4G advantage could quickly fade if (or more likely, when) Verizon gets its LTE act together next year.

Sprint fails to impress Wall Street with Q3 2010 earnings, still notches 644k net adds originally appeared on Engadget on Wed, 27 Oct 2010 19:43:00 EST. Please see our terms for use of feeds.

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Nokia’s quarterly results have just been made public and the company’s devices plus services sector has actually improved its income relative to last year: €7.2b of revenue was collected over the past three months versus €6.9b in the same period a year ago. Operating profit has also pepped up, going from the previous €785m to €807m. You’d think this would augur well for Stephen Elop‘s beginning at the helm, but the new man in charge is also presiding over a fundamental restructuring of operations at Nokia, which is expected to result in the redundancy of up to 1,800 employees globally. There are no specifics to tell us who’ll be losing out, but the aims are the boilerplate tasks of increasing efficiency, simplifying operations, and reducing time to market. Anyway, we doubt the great people of Finland will be pleased.

Continue reading Nokia reports improved earnings for Q3 2010, will still ‘streamline’ up to 1,800 employees out of a job

Nokia reports improved earnings for Q3 2010, will still ‘streamline’ up to 1,800 employees out of a job originally appeared on Engadget on Thu, 21 Oct 2010 06:26:00 EST. Please see our terms for use of feeds.

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Today, Google officially announced their third quarter results for 2010. As many probably expected, Google is still drawing in the money. In fact, it looks like the company has managed to beat analyst expectations for this quarter, in both revenue and earnings. Based on the announcement, Google has amassed $5.48 billion in revenue for this quarter.

The result is an overall revenue of $7.29 billion, which was an increase of 23 percent when compared to last year’s third quarter results. Google saw an increase of 16 percent in their paid clicks across the network of Google sites. The company’s net income was $2.17 billion, which is a 32 percent increase versus the last year’s net income of $1.64 billion. Google also announced that earnings per share were $7.64, which doesn’t include the effects of one-time costs, or stock-option compensation costs.

As of now, Google has $33.4 billion on cash-in-hand, marketable securities, and cash equivalents. Google also announced that they managed to hire 1,500 new employees during the quarter, which effectively raises Google’s employee count to 23,331. Google’s third quarter ended September 30th.

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As the third quarter trails to an end, earning results from companies are beginning to come in. Adobe has just reported their third quarter revenue earnings for this quarter, 2010, and they managed to post some record numbers. The company saw sales of $990.3 million for the third quarter, which is compared to the $697 million revenue recorded in 2009, which is a 42% jump from the previous year. Revenue also increased from $943.0 million in the second quarter of 2010.

Adobe managed to keep up the good work in their net income as well. The company reported that their non-GAAP diluted earnings per share quarter were $0.54, versus the $.035 recorded in the third quarter of last year. Recorded non-GAAP net income was listed at $284.0 million this quarter, put against the $186.1 million from 2009. Adobe’s CEO Shantanu Narayen made this comment about Adobe’s third quarter earnings for this year. “We remain bullish about Adobe’s long-term role in enabling the transformation of content and applications across industries.”

There’s no doubt that, despite the wars that Adobe fought in the tech market with the likes of Apple, that the company is doing well for itself. Beyond well, actually, as we look at their third quarter earnings. Let’s hope that all of the other companies out there were as lucky as Adobe, as we roll into the fourth quarter of 2010, and we start seeing more earning reports across the board.

Press Release

SAN JOSE, Calif.–(BUSINESS WIRE)–Adobe Systems Incorporated (Nasdaq:ADBE) today reported strong financial results for its third quarter fiscal year 2010 ended Sept. 3, 2010.

In the third quarter of fiscal 2010, Adobe achieved record revenue of $990.3 million, compared to $697.5 million reported for the third quarter of fiscal 2009 and $943.0 million reported in the second quarter of fiscal 2010. This represents 42 percent year-over-year revenue growth. Adobe’s third quarter revenue target range was $950 million to $1 billion.

“Strong performance in each of our major businesses contributed to record revenue and strong earnings in Q3,” said Shantanu Narayen, president and CEO of Adobe. “We remain bullish about Adobe’s long-term role in enabling the transformation of content and applications across industries.”

Third Quarter Fiscal 2010 GAAP Results

Adobe’s GAAP diluted earnings per share for the third quarter of fiscal 2010 were $0.44, based on 523.2 million weighted average shares. This compares with GAAP diluted earnings per share of $0.26 reported in the third quarter of fiscal 2009 based on 531.8 million weighted average shares, and GAAP diluted earnings per share of $0.28 reported in the second quarter of fiscal 2010 based on 533.3 million weighted average shares.

GAAP operating income was $302.0 million in the third quarter of fiscal 2010, compared to $167.6 million in the third quarter of fiscal 2009 and $227.3 million in the second quarter of fiscal 2010. As a percent of revenue, GAAP operating income in the third quarter of fiscal 2010 was 30.5 percent, compared to 24.0 percent in the third quarter of fiscal 2009 and 24.1 percent in the second quarter of fiscal 2010.

GAAP net income was $230.1 million for the third quarter of fiscal 2010, compared to $136.0 million reported in the third quarter of fiscal 2009 and $148.6 million in the second quarter of fiscal 2010.

Third Quarter Fiscal 2010 Non-GAAP Results

Adobe’s non-GAAP diluted earnings per share for the third quarter of fiscal 2010 were $0.54. This compares with non-GAAP diluted earnings per share of $0.35 reported in the third quarter of fiscal 2009 and non-GAAP diluted earnings per share of $0.44 reported in the second quarter of fiscal 2010.

Adobe’s non-GAAP operating income was $384.9 million in the third quarter of fiscal 2010, compared to $237.1 million in the third quarter of fiscal 2009 and $334.5 million in the second quarter of fiscal 2010. As a percent of revenue, non-GAAP operating income in the third quarter of fiscal 2010 was 38.9 percent, compared to 34.0 percent in the third quarter of fiscal 2009 and 35.5 percent in the second quarter of fiscal 2010.

Non-GAAP net income was $284.0 million for the third quarter of fiscal 2010, compared to $186.1 million in the third quarter of fiscal 2009 and $234.2 million in the second quarter of fiscal 2010.

Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Fourth Quarter Fiscal 2010 Financial Targets

For the fourth quarter of fiscal 2010, Adobe is targeting revenue of $950 million to $1 billion. The Company’s operating margin is targeted to be 27 percent to 30 percent on a GAAP basis, and 37 percent to 38 percent on a non-GAAP basis. In addition, the Company is targeting its share count to be between 516 million and 520 million shares, and it is targeting non-operating expense between $14 million and $19 million. Adobe’s GAAP and non-GAAP tax rate is expected to be approximately 24.5 percent.

These targets lead to a fourth quarter diluted earnings per share target range of $0.35 to $0.41 on a GAAP basis, and an earnings per share target range of $0.48 to $0.54 on a non-GAAP basis.

Reconciliation between these GAAP and non-GAAP financial targets is provided at the end of this press release.

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including those related to revenue, operating margin, non-operating expense, tax rate, share count, earnings per share and business momentum, which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure to develop, market and distribute new products and services or upgrades or enhancements to existing products and services that meet customer requirements, introduction of new products, services and business models by existing and new competitors, failure to successfully manage transitions to new business models and markets, continued uncertainty in economic conditions and the financial markets and other adverse changes in general political conditions in any of the major countries in which Adobe does business, difficulty in predicting revenue from new businesses, failure to realize the anticipated benefits of past or future acquisitions, and difficulty in integrating such acquisitions, costs related to intellectual property acquisitions, disputes and litigation, inability to protect Adobe’s intellectual property from third-party infringers, or unauthorized copying, use or disclosure, security vulnerabilities in our products and systems, interruptions or delays in our service or service from third-party service providers that host or deliver services, security or privacy breaches, or failure in data collection, failure to manage Adobe’s sales and distribution channels and third-party customer service and technical support providers effectively, disruption of Adobe’s business due to catastrophic events, risks associated with global operations, currency fluctuations, risks associated with our debt service obligations, changes in, or interpretations of, accounting principles, impairment of Adobe’s goodwill or amortizable intangible assets, changes in, or interpretations of, tax rules and regulations, Adobe’s inability to attract and retain key personnel, impairment of Adobe’s investment portfolio due to deterioration of the capital markets, and market risks associated with Adobe’s equity investments. For further discussion of these and other risks and uncertainties, individuals should refer to Adobe’s SEC filings.

The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe’s Quarterly Report on Form 10-Q for our third quarter ended Sept. 3, 2010, which Adobe expects to file in October 2010. Adobe does not undertake an obligation to update forward-looking statements.

About Adobe Systems Incorporated

Adobe revolutionizes how the world engages with ideas and information – anytime, anywhere and through any medium. For more information, visit www.adobe.com.

© 2010 Adobe Systems Incorporated. All rights reserved. Adobe, Creative Suite, Omniture and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.

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HP offered up its Q3 financials yesterday and posted net revenue of $30.7 billion. That number represents a growth of 11.4% of $3.1 billion from the same quarter of 2009. HP has already announced this week that the anticipated webOS tablet would be coming in early 2011.

Other news from the financials of HP include a GAAP operating profit that increase 5% from last year to $2.3 billion. Non-GAAP operating profit for the company was $3.4 billion, up 14% from last year. HP also noted that it had record services signings during the quarter.

Revenue for services during the quarter grew 1% to $8.6 billion. HP also reported growth in most all of its business categories for the quarter. HP estimates that it will have revenue of about $32.5 billion to $32.7 billion in Q4.

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