Adobe Inc.

ADOBE SYSTEMS INC., $72.61, Nasdaq symbol ADBE, rose 9% this week after reporting better-than-expected quarterly results. In its fiscal 2014 second quarter, which ended May 30, 2014, Adobe earned $186.3 million, up 1.9% from $182.9 million a year earlier. Due to fewer shares outstanding, earnings per share rose 2.8%, to $0.37 from $0.36. That beat the consensus forecast of $0.30. Revenue gained 5.7%, to $1.07 billion from $1.01 billion. That also beat the consensus forecast of $1.03 billion....

RUBY TUESDAY INC., $7.48, symbol RT on New York, posted a smaller loss in the latest quarter as it continues to close unprofitable restaurants. It’s also moving its remaining locations back to their roots, serving reasonably priced food in a bar-and-grill atmosphere. However, Ruby Tuesday continues to face weak consumer spending, along with most U.S. casual dining chains. Competition also remains intense. The company’s shares have jumped 36% since it released its latest quarterly results. We think now would be a good to time sell the stock....

Businesses will likely spend more on software this year, as the global economy continues to recover. That’s good news for two market leaders we cover regularly in our advisory on U.S. stocks, Wall Street Stock Forecaster. We analyze which is in a better position to benefit as more companies adopt cloud computing. Note: This article updates our recent report on Symantec, issued just after the company had fired its CEO (see the article here). ADOBE SYSTEMS INC. (Nasdaq symbol ADBE; www.adobe.com) earned $151.3 million, or $0.30 a share, in its fiscal 2014 first quarter, which ended February 28, 2014. That’s down 14.9% from $177.9 million, or $0.35, a year ago. Revenue fell 0.8%, to $1.00 billion from $1.01 billion. The declines are mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription instead of a one-time purchase. That hurts the company’s short-term growth, but it should provide stable revenue streams as more users switch over. Subscriptions now supply over half of Adobe’s revenue....

Businesses will likely spend more on software this year, as the global economy continues to recover. That’s good news for these market leaders, but Symantec’s focus on security puts it in a better position to benefit as more companies adopt cloud computing. ADOBE SYSTEMS INC. $65 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 497.7 million; Market cap: $32.4 billion; Price-to-sales ratio: 8.3; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) earned $151.3 million, or $0.30 a share, in its fiscal 2014 first quarter, which ended February 28, 2014. That’s down 14.9% from $177.9 million, or $0.35, a year ago. Revenue fell 0.8%, to $1.00 billion from $1.01 billion. The declines are mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription instead of a one-time purchase. That hurts the company’s short-term growth, but it should provide stable revenue streams as more users switch over. Subscriptions now supply over half of Adobe’s revenue....

ADOBE SYSTEMS INC. $65 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 497.7 million; Market cap: $32.4 billion; Price-to-sales ratio: 8.3; No dividends paid since June 2005; TSINetwork Rating: Average; www.adobe.com) earned $151.3 million, or $0.30 a share, in its fiscal 2014 first quarter, which ended February 28, 2014. That’s down 14.9% from $177.9 million, or $0.35, a year ago. Revenue fell 0.8%, to $1.00 billion from $1.01 billion.

The declines are mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription instead of a one-time purchase. That hurts the company’s short-term growth, but it should provide stable revenue streams as more users switch over. Subscriptions now supply over half of Adobe’s revenue.

The company spends 21% of its revenue on research, which hurts its earnings. That’s partly why the stock trades at a high 59.1 times the $1.10 a share that Adobe will likely earn in fiscal 2014. A high p/e increases the risk of a sudden price drop if its growth stalls. As well, Adobe mainly serves customers in cyclical businesses, like publishing.

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ADOBE SYSTEMS $62.11 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 497.7 million; Market cap: $30.6 billion; No dividends paid) earned $0.30 a share in the three months ended February 28, 2014. That’s down 14.3% from $0.35 a year earlier. Revenue fell 0.8%, to $1.00 billion from $1.01 billion. Results fell mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription, instead of a one-time purchase. That hurts its short-term growth, but the switch should provide more predictable revenue streams. Subscriptions now supply over half of Adobe’s revenue. The stock now trades at 56.5 times the $1.10 a share that Adobe will likely earn in 2014. That’s a high p/e ratio for any company, but especially one that mainly serves customers in cyclical businesses like publishing....

ADOBE SYSTEMS $62.11 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 497.7 million; Market cap: $30.6 billion; No dividends paid) earned $0.30 a share in the three months ended February 28, 2014. That’s down 14.3% from $0.35 a year earlier. Revenue fell 0.8%, to $1.00 billion from $1.01 billion.

Results fell mainly because Adobe is now selling its Creative Cloud package of photo-editing and desktop-publishing programs as a subscription, instead of a one-time purchase. That hurts its short-term growth, but the switch should provide more predictable revenue streams. Subscriptions now supply over half of Adobe’s revenue.

The stock now trades at 56.5 times the $1.10 a share that Adobe will likely earn in 2014. That’s a high p/e ratio for any company, but especially one that mainly serves customers in cyclical businesses like publishing.

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SYMANTEC CORP., $18.20, Nasdaq symbol SYMC, fell 13% on Friday after it fired Steve Bennett, its president and CEO. The company said the decision resulted from an ongoing review and wasn’t in response to any single event. Symantec has appointed board member Michael Brown as its interim CEO. The company sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. Symantec is in the midst of a major restructuring that mainly involves cutting jobs and streamlining its product lines and marketing operations. The plan should help the company expand its profit margin (operating income divided by revenue) to over 30.0% by 2017; in the current quarter, which ends March 31, 2014, Symantec expects its profit margin to range from 24.5% to 26.0%....

CHESAPEAKE ENERGY CORP., $24.67, symbol CHK on New York, is preparing to spin off its oil-field services division into a separate, publicly traded company. The new firm would be called Seventy Seven Energy and would trade under the SSE symbol. Chesapeake would then hand out all of the new company’s shares to its shareholders in a tax-free transaction. The division, now called Chesapeake Oilfield, provides contract drilling, hydraulic fracturing, equipment rentals, trucking and other services. Combined, drilling and hydraulic fracturing supply over 75% of its revenue. Chesapeake Oilfield has around 71 active drilling rigs and nine fleets of pressure-pumping trucks for fracturing....

SYMANTEC CORP. (Nasdaq symbol SYMC; www.symantec.com) sells computer security technology, including anti-virus and email filtering software, to businesses and consumers. It also offers data-archiving software....