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Does Adobe-Omniture Deal Really Make Sense?


This is no small fish the company wants to swallow up.

My wife cuts my hair. This is because I don't have too much of it and it takes all of ten seconds to do it with a clipper. So I was getting a trim last night when she nicked my ear. Actually, that's an understatement since she actually sliced it open. And this was no surgical cut. It was more like a gash a small chainsaw would make. Now I know what Evander Holyfield felt like after the Tyson fight.

Asian stocks rose overnight. The Hang Seng was up 2.57% and the Nikkei was up 0.52%. European stocks were up earlier this morning, too. And here in the US, we're currently trading higher.

Here's what I'm seeing at today:

Adobe (ADBE):
Did you happen to see the California-based company's third-quarter numbers? Excluding items, it put up $0.35 a share in the period, which was a shiny penny north of expectations. It beat on the top line, too. And it intends to pony up a hefty $1.8 billion for software company Omniture (OMTR).

Some thoughts:

1. The quarter came in better than expected, which was nice but not blockbuster. And in and of itself, it doesn't convince me that I should belly up to the shares.

2. The aforementioned "deal" could -- and I emphasize the word "could" -- be a big deal for the company down the line, but that remains to be seen. Right now, I don't have a very good feel one way or the other. Note that this year the Street is expecting Omniture to generate a little more than $354.4 million in sales whereas Adobe is expected to generate $2.9 billion on the top line. My point: This isn't a small fish it plans on swallowing. There's some potential risk here, too.

3. Bottom line: I'm not feeling the love and plan on steering clear. If it pulls back to the high $20s or lower $30s, I might revisit the idea.

For my last take on Adobe, click here.

Rambus (RMBS):
Yesterday, the memory-chip company upped its revenue guidance for its third quarter. According to the release: "The Company expects revenue for the quarter to be between $27 million and $28 million. Rambus had initially provided revenue guidance for the quarter of $22 million to $25 million."

My feel:

1. Clearly, its good news. But it's not enough to offset the red ink Wall Street expects it to crank out in 2009.

2. There's no massive open-market insider-buying.

3. Despite my distaste for the shares, I must admit there's a chance we could see a new 52-week high in the not-too-distant future.
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No positions in stocks mentioned.

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