Adobe plans layoffs, overhaul to focus on digital

San Jose: Adobe Systems Inc plans to lay off more than 7 per cent of its workforce and take a charge of up to $94 million as part of a restructuring to focus on core businesses such as digital media and marketing.

The news, announced just months after the world's largest maker of design software had projected better-than-expected fourth-quarter revenue, surprised Wall Street and wiped 9.2 per cent off its shares.

Adobe, known for its Photoshop and Acrobat software, is updating its suite of products to keep pace with trends and moving to support the increasingly popular HTML5 programing language.

The company did not specify where or what changes might occur. In September, CFO Mark Garrett warned that its print and publishing segment was expected to stay flat this quarter from the previous one.

Revenue from Japan, which accounted for 13 per cent of the company's sales last fiscal year, had also taken a hit from the earthquake and tsunami that struck Japan earlier this year.

The 750 positions to be eliminated - spanning all business units and geographies - reflected shifts in investment toward digital media and marketing, changing priorities, and reductions in unspecified projects, spokeswoman Jodi Sorenson said.

Adobe, which reported a total head count of 10,041 at the end of the fiscal third quarter, is expected to shed more light on its internal overhaul during its annual analysts' conference on Wednesday.

For now, the company is sticking with previous estimates for the fourth quarter for both revenue and earnings excluding items.

In September, Adobe projected revenue of $1.075 billion to $1.125 billion, and earnings excluding items of 57 cents to 64 cents a share, on a non-GAAP basis.

The company said in a statement on Tuesday it expects to record pre-tax charges of $87 million to $94 million for consolidation and severance, of which $73 million to $78 million would be booked in the fiscal quarter ending December 2.

Shares in Adobe slid to $27.62 in extended trading, from a close of $30.42 on the Nasdaq.