Adobe releases its fourth-quarter earnings Thursday after the market close. The company’s earnings slightly beat the consensus of analysts’ estimates in the third quarter.
Adobe is a company most consumers are familiar with, because its software is loaded all over their computer desktops: Acrobat for accessing PDFs, Flash for playing YouTube videos, Photoshop for photoshopping pictures. It’s even become a verb.
The problem for Adobe is that it’s been better known in the past few months for having suffered a massive security breach by cyber criminals. The hack was identified by the company in September. It now appears tens of millions of emails and encrypted passwords were stolen from Adobe, as well as source code for some of its most popular products.
Technology analyst Carl Howe at the Yankee Group says the company is in part a victim of its own success. “They’re a fairly ubiquitous technology — most computers have some Adobe software on them — and that has made them a great target for malware and security exploitation.”
But Howe says unlike Microsoft, whose software is also on computers everywhere, and has strengthened its cyber-defenses over the past decade, Adobe hasn’t focused as keenly on the threat.
“I think they have been behind the eight-ball on security,” Howe says. “And the question is whether they’re going to catch up.”
Fatemeh Khatibloo, senior analyst at Forrester Research, believes that because of the company’s premier position in multiple product categories, it has an obligation to its customers to focus on security now. “Adobe should be held to a higher standard,” she says.
Khatibloo doesn’t think consumers who use popular programs like Photoshop and Acrobat will necessarily be deterred from further engagement with the company by the recent data breach. But professional clients, especially big corporations and agencies that use the products for advertising and marketing, might hesitate at some point. She points out that these clients are increasingly looking to Adobe as a partner in their marketing efforts.
“Do I think that consumers are necessarily going to stop using the Creative Suite?” she asks. “Probably not. But do I think some of their marketing clients, some of their brands and enterprise clients, might look at them twice and say, ‘Gosh, should I really be relying on Adobe as my strategic partner?’ Possibly.”
Analysts say Adobe probably has some time to act — on fortifying its internal defenses against hackers, and improving its image and communication around these issues — before cyber-attacks actually impact the bottom line.
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