Who are Adobe Systems Inc.'s competitors

Background: What Adobe expects from the Macromedia takeover

After the takeover of Macromedia by Adobe for 3.4 billion US dollars, Adobe is unlikely to have to fear much competition in the professional graphics sector. However, Adobe's CEO Bruce Chizen and Macromedia's chairman Stephen Elop do not see any antitrust problems. They both said that in a conference call today.

According to Chizen, the merger is primarily pursuing strategic goals - the aim is to build one of the largest software houses in the world. Both companies could grow faster together than separately. Adobe and Macromedia have similar ideas about how solutions for efficient, interactive and secure communication could look, added Chizen. Both companies also worked extremely profitably, which was the decisive factor for the takeover. Elop emphasized the solid growth of Macromedia and added that currently the possibility of achieving synergy effects and saving costs is extremely cheap.

Macromedia shareholders will receive 0.69 Adobe shares for each of their common shares as a tax-free exchange based on the price on Friday, April 15, 2005. Adobe's shares were $ 60.66 on Friday and Macromedia's was $ 33.45. The offered value of 41.86 US dollars is 25 percent above that of Macromedia shares. Analysts estimate sales for the second quarter of 2005 at Adobe at about 490 million, at Macromedia at 111 million US dollars. After the acquisition, annual sales are expected to be $ 2.1 billion.

The name of the new company will be Adobe Systems Incorporated; Adobe wants to integrate Macromedia's structures into its own. The company headquarters will remain in San Jose, Macromedia's previous location in San Francisco will be retained. Bruce Chizen remains CEO of Adobe Systems and Shantanu Narayen remains as Chief Operating Officer (COO). Stephen Elop, the previous Macromedia CEO, will take on the newly created role of Worldwide Field Operator. If the shareholders agree, the takeover should be completed in autumn. Until then, both companies will continue to work separately.

The brands of Adobe and Macromedia are to be retained. Information about the future of the flagships, Adobe's Creative Suite and Macromedia's Studio MX, Chizen and Elop remained owed for the time being. In the past, Adobe used competing products it had taken over, such as the Pagemaker and the Framemaker, both DTP programs, for a few years, only to let them fall asleep in favor of their own solution, in this case InDesign. Industry insiders suspect that one or the other Macromedia product could suffer a similar fate.

When asked how the corporate management wanted to solve the conflict between the vector graphics programs Illustrator and Freehand, once archenemies, which is questionable under competition law, Chizen replied: "We don't see a problem there. After all, there are a lot of other competitors such as the German product KIllustrator." He did not mention that this will not be further developed at all.

Adobe and Macromedia expect good opportunities from the merger, especially in the non-PC area, such as set-top boxes and in the mobile sector. Narayan pointed out a possible dovetailing of the real-time functions of Macromedia's web conference system Breeze with PDF.

In fact, the two manufacturers have a lot in common, but the specific orientations are quite different. When it comes to professional image processing (Photoshop) and the video authoring sector (Premiere, After Effects, Encore DVD), Adobe is clearly one step ahead. Macromedia scores on mobile devices and in the web authoring market. With Flash and PDF (Portable Document Format), both manufacturers have established formats in the running: Macromedia's vector animation format Flash now also masters video functions and is becoming increasingly popular on smartphones. Adobe's PDF, on the other hand, is no longer an integral part of the web, let alone the print sector.

With GoLive and LiveMotion Adobe fought in vain against Dreamweaver and Flash, Macromedia, however, could never really gain a foothold in the profitable graphics sector, despite the ambitious Fireworks. So far, both manufacturers have always tried to compete with each other with new features - in line with the competition that stimulates business. Now one big competitor is out of the way. (akr)

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