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Adobe Downsizes, But It Really Needs to Restart

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Buggy, bloated software desperately needs fixes.

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In an 8-K filing made with the Securities and Exchange Commission late Tuesday, Adobe (ADBE) announced it will be cutting 680 full-time positions -- roughly 9% of its workforce -- over the next year.

According to the company, the layoffs were essential to align costs with its fiscal 2010 budget, which it referred to in the filing as "The Restructuring Plan."

Ross MacMillan, an analyst at Jefferies, estimates the savings will add about $0.15 to $0.20 to Adobe's full-year adjusted earnings per share. He bumped his price target for the company's stock up to $40 from $37.

The current layoffs aren't the first round of cuts -- or the last, MacMillan predicts -- for Adobe.

Last December, 600 employees -- roughly 8% of the workforce -- were let go due to the weakened economy, the company cited. And MacMillian foresees additional cuts at Omniture, a San Jose software company which Adobe acquired last month -- on top of the already 108 jobs axed from the company.

While the downsizing may give Adobe's bottom line a boost, the company must contend with the serious issues already plaguing its products in order to move forward successfully.

For more than 20 years, Adobe Photoshop and its Creative Suite have been the flagship software for the company. But for two decades, user complaints remain unsolved.

Inflated cost, glitchy interface, buggy updates, and bloated memory usage continue to plague the program. Photoshop's high rate of piracy coupled with the steady release of tighter, cleaner open-source graphics editors puts Adobe at risk of no longer having the go-to program for image manipulation.

The company acquired Macromedia and its Flash platform in December 2005, continuing the tradition of animated banner ads and online video.

However, despite the work on the platform, Flash still has more than a few kinks to iron out. It remains a cookie-implanting, HTML-breaking, standard-ignoring system hog. Worse yet, it's implemented everywhere, preventing an easy fix with an infinite number of variations.

Adobe's recent deal with BlackBerry (RIMM), Palm (PALM), Google Android (GOOG), Windows Mobile (MSFT), and Nokia (NOK) to put its Flash Player on the companies' phones had one notable holdout: Apple (AAPL). Clearly, Apple is worried of the heavy resources needed to run Flash on the iPhone -- a direct and indirect indictment against both parties.

And Adobe Reader? A PDF document detailing the problems with that bloated piece of junk would take a minute and a half to fully load.

Fortunately for the consumer, third-party developers are designing software at a blazing pace to provide low-weight alternatives to Adobe's sluggish lineup.

Unless the company steps up its game, Adobe is poised to become another complacent tech giant who's been usurped by a lighter, faster, and more user-friendly program.

After all, which would you rather use now: Internet Explorer or Mozilla Firefox?


Copyright 2009 Minyanville. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.


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