Before one-time items, earnings per share declined 9.0%, to $0.61 from $0.67, on more shares outstanding. Revenue was flat at $1.15 billion.

Adobe is doing a good job of selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription service instead of a one-time purchase.

As a result, the company’s subscription revenue jumped 51.5% from a year earlier and now accounts for 17% of its overall revenue. Adobe still gets 74% of its revenue from direct software sales. Services and support supply the remaining 9%.

Moving to a subscription model has slowed Adobe’s short-term revenue and earnings growth, but it should give the company steadier revenue streams.

Adobe is still a hold.

In its fiscal 2012 third quarter, which ended June 30, 2012, Fair Isaac’s earnings per share rose 1.7%, to $0.59 from $0.58. That matched the consensus estimate of $0.59. Revenue rose 6.5%, to $160.5 million from $150.7 million.

Research spending is a hidden plus

Fair Isaac spends around 10% of its sales on research. That lets it keep producing innovative new products that help it stay ahead of its competitors.

The company is also making acquisitions. It recently agreed to buy Adeptra, which makes systems that let businesses communicate with customers through a range of channels, including voice, instant messaging, mobile applications and email.

Fair Isaac’s balance sheet is sound. It holds cash and securities of $150.7 million, or $4.41 a share. Its long-term debt of $496 million is a manageable 33.1% of its market cap.

The company should earn $2.56 a share in fiscal 2012. The stock has risen 78.8% over the last year, and now trades at 17.6 times that figure. However, that ratio is not unreasonable for a company with strong growth prospects and high research spending.

Fair Isaac is a buy.

ADOBE SYSTEMS $33.44 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 496.1 million; Market cap: $16.6 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use Adobe’s software to create print publications and web pages.

Adobe’s revenue rose 6.6% in the three months ended August 31, 2012, to $1.08 billion from $1.03 billion a year earlier. Even so, that missed the consensus estimate of $1.1 billion.

The company is doing a good job of selling its Creative Cloud package of photo-editing and desktop-publishingprograms as a subscription service instead of a one-time purchase.

Subscription sales will bring stability

Subscription revenue jumped 50.9% in the quarter, and now accounts for 16% of Adobe’s overall revenue, up from 11% a year earlier. The company still gets 75% of its revenue from direct software sales. The remaining 9% comes from services and support.

Excluding one-time items, earnings rose 6.7%, to $291.2 million from $272.8 million. Earnings per share rose 5.5%, to $0.58 from $0.55, on more shares outstanding.

Moving to a subscription model will slow Adobe’s short-term revenue and earnings growth, but it should give the company steadier revenue streams. Because of this ongoing switch, Adobe expects to earn between $0.53 and $0.58 a share in its current quarter. That’s well below the consensus estimate of $0.67.

Adobe Systems is still a hold.

NBC has launched two applications using Adobe technology. Both include software that measures user traffic and offers targeted advertising.

The first app, NBC Olympics Live Extra, will let customers of cable, satellite and telephone companies live-stream competitions and events. The other app, called NBC Olympics, will provide additional information, such as TV and online schedules, live results and highlights.

Adobe is still a hold.

DUNDEE REIT $39.04 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 96.5 million; Market cap: $3.8 billion; Dividend yield: 5.6%) aims to sell off its industrial properties over the next 18 months, to focus on adding to its office properties.

Right now, Dundee owns 22.5 million square feet of office space across 175 properties and 5.7 million square feet of industrial space across 74 properties. The REIT’s industrial holdings contribute about 8% of its revenue. Dundee spent a total of $1.6 billion on property purchases in 2011, up from $900 million in 2010.

The trust’s growth-by-acquisition strategy adds risk, but it is steadily diversifying its holdings outside western Canada by purchasing more buildings in other parts of the country. At the start of 2010, about 70% of Dundee’s properties were in western Canada. That’s now down to less than 55%.

Dundee REIT is a buy.

WESTJET AIRLINES $16.47 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 126.2 million; Market cap: $2.1 billion; Dividend yield: 1.5%) has signed a code-sharing agreement with China Eastern Airlines, one of that country’s largest carriers.

Under these agreements, two airlines co-operate on flights and baggage handling. Code-sharing agreements are especially valuable for attracting business passengers. That’s because these agreements let customers seamlessly connect between flights and gain frequent-flyer points for the entire distance travelled.

As well, WestJet currently only has Boeing 737s in its fleet. That limits how far it can fly, so it relies on code-sharing and other agreements to attract international travellers.

WestJet is still a buy.

In its fiscal 2012 second quarter, which ended March 31, 2012, Fair Isaac’s earnings per share excluding one-time items jumped 41.0%, to $0.55 from $0.39. The company’s ongoing cost cuts were a major reason for the increase. Sales rose 4.4%, to $159.5 million from $152.8 million.

Fair Isaac spends around 10% of its sales on research. That lets it keep producing innovative new products that help it stay ahead of its competitors.

The company’s balance sheet is sound. It holds cash and securities of $191.1 million, or $5.31 a share. Its long-term debt of $504 million is a manageable 33.6% of its market cap.

Fair Isaac should earn $2.56 a share in fiscal 2012. The stock has risen 111.7% since the start of October 2011, and now trades at 16.6 times that figure. However, that’s not unreasonable for a company with strong growth prospects and hefty research spending.

Fair Isaac is a buy.

ADOBE SYSTEMS $31.99 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 496.1 million; Market cap: $15.9 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use its software to create print publications and web pages.

The company also makes Adobe Flash, which lets website developers make their pages more interactive by adding animation and video. Around 98% of the world’s computers have Flash installed on them.

Last year, Adobe stopped making Flash for smartphones and other mobile devices. Instead, it’s focusing on developing products that are based on the newer HTML5 Internet standard.

Meanwhile, Adobe’s revenue rose 9.9% in the three months ended June 1, 2012, to $1.12 billion from $1.02 billion a year earlier. The gain mainly resulted from strong sales of the Creative Suite package of photo-editing and desktop-publishing programs. Adobe also sold more software that makes online ads more effective.

Without one-time items, earnings rose 7.1%, to $299.6 million from $279.9 million. Earnings per share rose 9.1%, to $0.60 from $0.55, on fewer shares outstanding.

The company holds cash of $3.0 billion, or $5.98 a share. Its long-term debt of $1.5 billion is a low 9.4% of its $15.9-billion market cap.

Even with the higher results, Adobe’s shares dropped about 8% after its earnings release. That’s because weakness in Europe, where the company gets 30% of its sales, will likely slow sales growth. As well, Adobe aims to switch its customers to ongoing software subscriptions from one-time licence purchases. That should boost its longer-term sales, but the transition could hurt its results in the near term.

Adobe Systems is still a hold.

Customers are waiting for the new version of Adobe’s Creative Suite of publishing programs, which it will release later this year. That was the main reason for the lower earnings and weak sales growth.

The stock trades at 13.8 times the $2.42 a share that Adobe will probably earn in fiscal 2012. The company also holds cash and investments of $2.8 billion, or $5.53 a share. Its long-term debt of $1.5 billion is just 9% of its market cap.

Adobe is a hold.

The company also makes Adobe Flash, which lets website developers make their pages more interactive by adding animation and video.

Adobe recently stopped making Flash for smartphones and other mobile devices. Instead, it will focus on developing products that are based on the newer HTML5 Internet standard.

Meanwhile, strong demand for Adobe’s products pushed up its revenue by 11.0% in its third quarter, which ended December 2, 2011, to a record $4.2 billion from $3.8 billion in 2010.

Earnings rose 20.0%, to $1.2 billion from $1.0 billion. Adobe spent $695 million on share buybacks in the past year. Because of fewer shares outstanding, earnings per share rose 21.8%, to $2.35 from $1.93.

The company holds cash of $2.9 billion, or $5.78 a share. Its long-term debt of $1.5 billion is a low 9.4% of its $16.0-billion market cap.

Adobe Systems is still a hold.

FAIR ISAAC CORP. $38.98 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 36.0 million; Market cap: $1.4 billion; Dividend yield: 0.2%) makes FICO Scores, which dominates the market for software that helps businesses evaluate customer creditworthiness. The company is also profiting by selling software that helps credit card issuers control fraud and analyze their clients’ spending patterns.

In its fiscal 2012 first quarter, which ended December 31, 2011, Fair Isaac’s earnings jumped 87.4%, to $30.0 million from $16.0 million a year earlier. Earnings per share rose 107.5% to $0.83 from $0.40, on fewer shares outstanding. The latest earnings also beat the consensus estimate of $0.62 a share.

Savings from the company’s ongoing cost cuts were a big reason for the increase. Sales rose 9.2%, to $170.3 million from $155.9 million.

Fair Isaac spends around 10% of its sales on research. That lets it keep producing innovative new products that help it stay ahead of its competitors.

The company’s balance sheet is sound. It holds cash and securities of $231.6 million, or $6.28 a share. Its long-term debt of $504 million is a manageable 36.0% of its market cap.

Fair Isaac should earn $2.52 a share in fiscal 2012. The shares have risen 95% since the start of October 2011, but they still trade at just 15.5 times that figure.

Fair Isaac is still a buy.

In its fiscal 2011 fourth quarter, which ended September 30, 2011, Fair Isaac’s earnings jumped 55.4%, to $24.6 million from $15.8 million a year earlier. Earnings per share rose 66.7% to $0.65 from $0.39, on fewer shares outstanding.

Savings from the company’s ongoing cost cuts were a big part of the increase. The latest earnings also beat the consensus estimate of $0.61 a share. Revenue rose 3.3% to $160.2 million from $155.1 million.

Fair Isaac spends around 11% of its revenue on research. That lets it keep producing innovative new products that help it stay ahead of its competitors.

The company’s balance sheet is sound. It holds cash and securities of $241.6 million, or $6.00 a share. Its long-term debt of $504 million is a manageable 38.8% of its market cap.

Fair Isaac should earn $2.52 a share in fiscal 2012. The stock is up 70% since the start of October 2011, but the shares trade at just 13.5 times that figure.

Fair Isaac is still a buy.

ADOBE SYSTEMS INC. $28.54 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 504.5 million; Market cap: $17.5 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. As well, graphic designers use Adobe’s software to create print publications and web pages. The company also makes Adobe Flash, which lets web site developers make web pages more interactive by adding animation and video.

In its third quarter, which ended September 2,
2011, Adobe’s earnings per share rose 1.9%, to $0.55
from $0.54. Revenue rose 2.3%, to $1.01 billion from
$990.3 million.

Adobe has just announced a restructuring plan. A big part of this plan is its decision to quit making its Flash software for smartphones and other mobile devices. That’s mainly because Apple Inc. refused to include Flash in its hugely popular iPhone and iPad. Apple feels Flash is slow and uses too much battery power.

Adobe will shift its focus to HTML5, a rival format that Apple supports. The company will continue to make Flash for online gaming and video services. It also plans to develop new products that will help businesses improve their marketing.

The restructuring will result in an 8% cut to Adobe’s workforce. The company expects to pay between $87 million and $94 million in severance and other related costs.

Shifting to more promising products and services improves Adobe’s long-term prospects. The company is also switching to a subscription model for its software instead of charging an upfront fee. That will make its products more affordable and give it steadier revenue streams, but it will also slow its sales growth.

Adobe Systems is still a hold.

In its third quarter, which ended September 2, 2011, Adobe’s earnings fell 15.2% to $195.1 million, or $0.39 a share. A year earlier, it earned $230.1 million, or $0.44 a share. Without one-time items, earnings per share would have risen 1.9%, to $0.55 from $0.54. Revenue rose 2.3%, to $1.01 billion from $990.3 million.

The company spent $181.0 million (or 17.9% of its revenue) on research in the latest quarter, up 7.6% from $168.3 million (or 17.0% of revenue) a year earlier.

The higher research spending should help Adobe better adapt its Flash technology to smartphones and tablet computers. Right now, Apple and other mobile device makers prefer competing software that uses less power.

Adobe holds cash and investments of $2.7 billion, or $5.50 a share. Its long-term debt of $1.5 billion is a low

11% of its market cap. The company’s strong balance sheet is helping it buy other companies, mainly smaller software firms. In the first nine months of fiscal 2011, it spent $107.1 million on acquisitions.

One of the companies Adobe recently bought is EchoSign, a privately held maker of software that lets users sign documents electronically. This technology has huge potential as businesses switch from paper contracts to electronic versions.

Adobe trades at a reasonable 15.1 times its forecast fiscal 2011 earnings of $1.85 a share. However, its desktop publishing and Flash products face rising competition from larger software makers.

Adobe is a hold.

In its third quarter, which ended September 2, 2011, the tech stock’s earnings fell 15.2% to $195.1 million, or $0.39 a share. A year earlier, it earned $230.1 million, or $0.44 a share. Without one-time items, earnings per share would have risen 1.9%, to $0.55 from $0.54. That beat the consensus estimate of $0.54 a share.

Revenue rose 2.3%, to $1.01 billion from $990.3 million. That missed the consensus revenue estimate of $1.03 billion.

Tech stocks: Adobe spends more to adapt Flash technology to mobile devices

The company spent $181.0 million (or 17.9% of its revenue) on research in the latest quarter. That’s up 7.6% from $168.3 million (or 17.0% of revenue) a year earlier. The higher research spending should help Adobe to better adapt its Flash technology to mobile devices like smartphones and tablet computers. Right now, Apple and other mobile device makers prefer competing software that uses less power.

Adobe holds cash and investments of $2.7 billion, or $5.50 a share. The tech stock’s long-term debt of $1.5 billion is 12% of its market cap.

We updated our advice on Adobe in our September 23, 2011, Stock Pickers Digest hotline, which you can immediately view when you take a 1-month free trial to Stock Pickers Digest. Click here to learn how you can start profiting from Stock Pickers Digest right away.

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Revenue rose 8.5%, to $1.0 billion from $943.0 million. The company recently upgraded its Creative Suite package of photo-editing and desktop-publishing programs. However, Adobe is seeing weaker demand in Europe.

Adobe holds cash of $2.6 billion, or about $5.20 a share. The company’s long-term debt of $1.5 billion represents a low 10.3% of its market cap.

Adobe is still a hold.