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April 18, 2005 8:05 AM PDT
Adobe to buy Macromedia for $3.4 billion
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The all-stock deal, announced Monday, is designed to create a better-stocked source of tools for building and distributing multimedia content across a range of operating systems and devices, the companies said. They also stressed that the merger will enable them to expand more rapidly into the market for audio and video applications for handhelds and other gadgets.
Bruce Chizen
CEO, Adobe
In a conference call, Adobe CEO Bruce Chizen said that the buyout creates a more robust company capable of delivering new technology into a number of emerging markets.
"This acquisition strengthens Adobe's mission of helping people and organizations communicate better," Chizen said. "Whether it is documents, images, the Web, TV or new wireless and other non-PC devices, the methods we use to access this information continue to evolve."
Market reaction to the deal was mixed. In morning trading, Adobe was down $7.22, or 12 percent, to $53.44. Macromedia was up $2.55, or 8 percent, to $36.
Adobe is best known for its PDF, or Portable Document Format, technology for presenting text files online. Macromedia's flagship product is the Flash animation software.
Chizen said the combined entity will be able to serve a wider audience than either company currently reaches and deliver new tools and services to content developers as the multimedia software sector evolves.
"The formats and standards governing communications methodologies are rapidly changing, and the creators of this information are challenged with how they cost-effectively create, deliver and manage that information," Chizen said.
In an interview with CNET News.com in February, Chizen discussed San Jose, Calif.-based Adobe's shift toward providing software for big companies and the shadows cast by software makers Microsoft and Apple Computer.
"If you just look at the number of government agencies around the world that already encourage the use of PDF and accept it as a de facto standard, it's pretty hard for me to see how Microsoft's going to come in and just unseat all those workflows," he said at the time. "But they are Microsoft and they do have $40 billion in revenue."
Under the terms of the deal, Macromedia's shareholders will receive 0.69 share of Adobe stock for each share of Macromedia stock. Based on Adobe's closing price of $60.66 on Friday, each Macromedia share will be worth $41.86. The deal represents a 25 percent improvement for Macromedia shareholders, based on the $33.45 closing price of the multimedia company's stock Friday.
In the combined company, Chizen will remain Adobe's CEO, and Shantanu Narayen will retain his position as president and chief operating officer. Macromedia's president and CEO, Stephen Elop, will join Adobe with the title of president of worldwide field operations. Rob Burgess, chairman of Macromedia's board of directors, will join Adobe's board.
Elop, who has been an executive with San Francisco-based Macromedia since 1998, said the merger will allow the combined company to expand its reach into new areas of multimedia authoring, with a growing emphasis on bringing his company's Flash graphics presentation format into new devices. Along with added resources, the executive said, Adobe will provide Macromedia with a range of potential customers.
Adobe versus the world
"By focusing on more complete solutions that utilize our platform, and by interacting on an enterprise footing with our largest customers, we have been able to expand Macromedia from being not only a supplier of great software but also a strategic vendor to a growing number of customers," Elop said. "It makes sense to do this today because we are doing well."
Adobe's financial team said that based on a number of similarities between the two companies, it expects some cost savings once the companies are combined.The financial team did not supply further specifics but did say the combined entity will be "built on Adobe's infrastructure."
In conjunction with the deal, Adobe announced plans to repurchase $1 billion in stock after the Macromedia acquisition is completed. The transaction is expected to close later this year.
In combination with the acquisition announcement, Adobe reported that its second-quarter earnings and revenue will reach the high end of its previous guidance, based on strong demand for its flagship Acrobat desktop publishing software. In March, Adobe announced estimates of 51 cents to 55 cents per share, on revenue of $475 million to $495 million.
Macromedia said it expects to exceed its previous revenue guidance of $108 million to $113 million for its fiscal fourth quarter, which ended March 31.
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it and turn into more Adobe Bloatware, basically capable
software oversaturated with extraneous scope and features. I
suppose that this take-over is just business, but I have learned
that Adobe may know business, but for the small time user,
Adobe sure doesn't know software.
That's why I have trashed my Aodbe software as soon as I could
find a reasonable replacement.
Maybe for the pros, Adobe is a good thing. But not for me.
it and turn into more Adobe Bloatware, basically capable
software oversaturated with extraneous scope and features. I
suppose that this take-over is just business, but I have learned
that Adobe may know business, but for the small time user,
Adobe sure doesn't know software.
That's why I have trashed my Aodbe software as soon as I could
find a reasonable replacement.
Maybe for the pros, Adobe is a good thing. But not for me.
Adobe, tends to upset users and industry 'partners' not to mention buggy, fat, slow software.
Moby Dick has swallowed the Little Mermaid...
Adobe, tends to upset users and industry 'partners' not to mention buggy, fat, slow software.
Moby Dick has swallowed the Little Mermaid...
*sigh* How I long for a cheap and graceful competitor product (and no, Gimp doesn't cut it, Gimp is the equivilent of MSPAINT)...
*sigh* How I long for a cheap and graceful competitor product (and no, Gimp doesn't cut it, Gimp is the equivilent of MSPAINT)...
I would love to see integration of some of the best tools of each of these companies. I'd also love to see better Flash integration in Adobe After effects.
This could be a really great thing!
I would love to see integration of some of the best tools of each of these companies. I'd also love to see better Flash integration in Adobe After effects.
This could be a really great thing!
I've flogged Macromedia on this many times and actually received this message early this year:
Hello Bill,
Thank you for contacting Macromedia Customer Service.
I understand your concerns and apologize for the misunderstanding.
We do not allow upgrades from an educational version to another educational
version because it is already specially priced for students and faculties only;
however, we do allow an upgrade from an academic version to a full commercial
version of the product.
To process this, you may call Customer Service at 800-4707211 for assistance.
Please prepare your proof of purchase when you make the call. n
Thank you for your continued interest in our products.
If you have further concerns, feel free to write us back.
Regards,
Jorelyn Kasilag
Macromedia Customer Service
I've flogged Macromedia on this many times and actually received this message early this year:
Hello Bill,
Thank you for contacting Macromedia Customer Service.
I understand your concerns and apologize for the misunderstanding.
We do not allow upgrades from an educational version to another educational
version because it is already specially priced for students and faculties only;
however, we do allow an upgrade from an academic version to a full commercial
version of the product.
To process this, you may call Customer Service at 800-4707211 for assistance.
Please prepare your proof of purchase when you make the call. n
Thank you for your continued interest in our products.
If you have further concerns, feel free to write us back.
Regards,
Jorelyn Kasilag
Macromedia Customer Service
Over the last couple of years, Macromedia has moved much of the development of its desktop products (e.g. Fireworks, Freehand, etc) to India. Companies offshore older, non-strategic software, not products they think are important. Meanwhile, important, more revenue strategic development was kept in the US, namely Flash and newer Flash-related products like Breeze and the Flash player. With the move into reoccurring, subscription-based services like Breeze, it was clear that the future wasn't at the Desktop for Macromedia.
Given the possible DOJ objections and overlap in their respective product lines, here's what's probably going to happen:
Fireworks = Dead (sad!)
Freehand = Dead (already on life support)
Photoshop = Active (duh!)
Illustrator = Active (duh!)
GoLive = Dead (only bought by Adobe to address the Dreamweaver issue)
Dreamweaver = Active (yea! long live Dreamweaver!)
LiveMotion (already dead)
Flash = Active
Director = on life support already (no new investment)
All server-based products from Macromedia (e.g. ColdFusion, Flex, Flash Comm. Server, etc.) will probably live as a portal into more Enterprise accounts. (Adobe is just figuring out the Enterprise from its Acrobat experiences, but it's still a little wobbly there.)
This acquisition comes down to two things: Flash and Dreamweaver.
On the Flash side, it's the dominance of the Flash player on the desktop, the defacto standard for vector-based animation and the rich Flash authoring tools for animators. Plus, with the Flash-player already installed on 98% of all desktops, all the new Flash-based products (e.g Breeze, FlashPaper, etc.) that provide an Enterprise a Rich Internet Applications platform for Adobe to extend it's Acrobat product line.
For Dreamweaver, it finally gets to the integration with Photoshop and Illustrator that many designers have been hoping for. While Fireworks has been great for many (including myself), Photoshop and Illustrator are the standard tools designers are trained with in schools and beyond in the print arena. Dreamweaver is light-years ahead of GoLive and the preferred choice for web design. Moving those skills to the Web via ImageReady solved part of the issues, but integration with Dreamweaver is next to non-existent. Maybe now Dreamweaver can get the integration with the rest of the Adobe family it deserves.
Many on this discussion board have complained about Adobe and it's quality in recent years. Many of these points are true and Adobe should take extreme measures to ensure that it keeps the loyal Macromedia users in the fold. All too many mergers have been for not when the acquiring company steamrolls over the installed base of the acquired company.
This could be a good merger at the end of the day. Adobe's challenge is to integrate a cohesive product strategy, make the hard choices to kill off overlapping product lines and to build upon the success that Macromedia has made with Flash.
Over the last couple of years, Macromedia has moved much of the development of its desktop products (e.g. Fireworks, Freehand, etc) to India. Companies offshore older, non-strategic software, not products they think are important. Meanwhile, important, more revenue strategic development was kept in the US, namely Flash and newer Flash-related products like Breeze and the Flash player. With the move into reoccurring, subscription-based services like Breeze, it was clear that the future wasn't at the Desktop for Macromedia.
Given the possible DOJ objections and overlap in their respective product lines, here's what's probably going to happen:
Fireworks = Dead (sad!)
Freehand = Dead (already on life support)
Photoshop = Active (duh!)
Illustrator = Active (duh!)
GoLive = Dead (only bought by Adobe to address the Dreamweaver issue)
Dreamweaver = Active (yea! long live Dreamweaver!)
LiveMotion (already dead)
Flash = Active
Director = on life support already (no new investment)
All server-based products from Macromedia (e.g. ColdFusion, Flex, Flash Comm. Server, etc.) will probably live as a portal into more Enterprise accounts. (Adobe is just figuring out the Enterprise from its Acrobat experiences, but it's still a little wobbly there.)
This acquisition comes down to two things: Flash and Dreamweaver.
On the Flash side, it's the dominance of the Flash player on the desktop, the defacto standard for vector-based animation and the rich Flash authoring tools for animators. Plus, with the Flash-player already installed on 98% of all desktops, all the new Flash-based products (e.g Breeze, FlashPaper, etc.) that provide an Enterprise a Rich Internet Applications platform for Adobe to extend it's Acrobat product line.
For Dreamweaver, it finally gets to the integration with Photoshop and Illustrator that many designers have been hoping for. While Fireworks has been great for many (including myself), Photoshop and Illustrator are the standard tools designers are trained with in schools and beyond in the print arena. Dreamweaver is light-years ahead of GoLive and the preferred choice for web design. Moving those skills to the Web via ImageReady solved part of the issues, but integration with Dreamweaver is next to non-existent. Maybe now Dreamweaver can get the integration with the rest of the Adobe family it deserves.
Many on this discussion board have complained about Adobe and it's quality in recent years. Many of these points are true and Adobe should take extreme measures to ensure that it keeps the loyal Macromedia users in the fold. All too many mergers have been for not when the acquiring company steamrolls over the installed base of the acquired company.
This could be a good merger at the end of the day. Adobe's challenge is to integrate a cohesive product strategy, make the hard choices to kill off overlapping product lines and to build upon the success that Macromedia has made with Flash.
and I currently buy both Adobe Creative Suite and Macromedia
Studio, but using only half the apps in each. Photoshop and
Dreaweaver are my primary applications, with Flash, Illustrator,
and InDesign following a close second. I'm imagining a Best-of-
Both-Worlds package that has these great apps and finally
makes the redundant apps GoLive, Fireworks, and Freehand go
away forever (especially GoLive!).
My only fear is that Adobe will do to Dreamweaver what they did
to GoLive which is 1) ruin a good product 2) abandon PHP
support, 3) add so much overhead to a website's architecture
that it makes it all but unusable. I hope they'll be smart enough
to abandon GoLive in favor of Dreamweaver and leave the best
web dev app on the market today alone.
-Steve Stringer
Dallas, TX
http://www.stringersites.com
and I currently buy both Adobe Creative Suite and Macromedia
Studio, but using only half the apps in each. Photoshop and
Dreaweaver are my primary applications, with Flash, Illustrator,
and InDesign following a close second. I'm imagining a Best-of-
Both-Worlds package that has these great apps and finally
makes the redundant apps GoLive, Fireworks, and Freehand go
away forever (especially GoLive!).
My only fear is that Adobe will do to Dreamweaver what they did
to GoLive which is 1) ruin a good product 2) abandon PHP
support, 3) add so much overhead to a website's architecture
that it makes it all but unusable. I hope they'll be smart enough
to abandon GoLive in favor of Dreamweaver and leave the best
web dev app on the market today alone.
-Steve Stringer
Dallas, TX
http://www.stringersites.com
I really hope that Adobe doesn't bring Macromedia into the fold and just owns it. I hope that worst all they do is make Macromedia products more compatible with the output formats of Adobe products or something like that. I also hope that if they drop anything it's imageready and golive.
I suppose only time will tell.
- This is going to hurt.
-
by System Tyrant
April 18, 2005 10:01 AM PDT
- I like Adobe and I like Macromedia, but this just sucks. I have this bad feeling like everyone else that Adobe is basically going to kill the good things that Macromedia has made. I hope I am wrong.
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See all 148 Comments >>I really hope that Adobe doesn't bring Macromedia into the fold and just owns it. I hope that worst all they do is make Macromedia products more compatible with the output formats of Adobe products or something like that. I also hope that if they drop anything it's imageready and golive.
I suppose only time will tell.