Adobe Inc.

SONY CORP. ADRs $46.77, New York symbol SNE, rose 5% this week after Toshiba Corp. said it would abandon its HD DVD high-definition video format due to declining sales and market share. Sony is the leading developer of the rival Blu-ray format, and the demise of HD DVD should lead to higher royalty income from sales of Blu-ray players and discs. The end of the format war should also fuel demand for Sony’s high-definition TV sets, as well as its PlayStation 3 video game console which includes a Blu-ray DVD player. Sony is a buy....

Many members of my Inner Circle have asked the same question this week: Is it time to buy? If I had to choose between “Buy” and “Sell”, I’d say “Buy”, by a big margin. Having said that, I’m obliged to repeat a caveat you’ve often heard from me over the years: Nobody can predict these things consistently. If you could do that, you’d eventually acquire a measurable proportion of all the money in the world, and nobody ever does that....

PRT FOREST REGENERATION INCOME FUND $6.54 (Toronto symbol PRT.UN; SI Rating: Speculative) (250-381-1404; www.prtgroup.com; Shares outstanding: 9.6 million; Market cap: $62.8 million) has cut its monthly distribution by 34.2% to $0.046 from $0.07. The units now yield 8.4%. The weaker U.S. housing market and the higher Canadian dollar has hurt Canadian forest products firms. That in turn has cut demand for the company’s seedlings. PRT Forest is a hold....

SYMANTEC, $16.38, symbol SYMC on Nasdaq, rose more than 10% this week after it reported that earnings excluding one-time items rose 16.3% in the three months ended December 31, 2007, to $291.7 million from $250.8 million a year earlier. Earnings per share rose 26.9%, to $0.33 from $0.26 on 9% fewer shares outstanding. Excluding the impact of acquisitions, revenues rose 15.3% to $1.53 billion from $1.32 billion. In the latest quarter, earnings gained from strong sales in Europe and Asia, and from the success of its Norton 360 AntiVirus software, which now accounts for 25% of its consumer sales. Symantec’s consumer business, which represents 29% of the company’s total revenues, grew 8%. Revenues from Symantec’s services business (6% of revenues) grew 40%. Security and data management sales (29% of revenues) grew 9%, and data center management sales (29% of revenues) rose 11%. In April 2007, Symantec acquired Altiris (management software) for $830 million. In December 2007, it bought Vontu (data loss prevention software) for $350 million. The company may make further acquisitions in 2008....

I’d choose ‘Buy’ Many members of my Inner Circle have asked the same question this week: Is it time to buy? If I had to choose between “Buy” and “Sell”, I’m going to say “Buy”, by a big margin....

H&R BLOCK INC. $20.02, New York symbol HRB, has canceled a deal to sell its Option One mortgage business due to the problems in the mortgage securities market and slumping home prices. Instead, the company will wind down its mortgage operations. It also plans to sell its mortgage servicing business, which collects loans on behalf of other lenders. These moves will cost H&R Block about $200 million (pre-tax). To put that in context, the company lost $302.6 million or $0.93 a share in the three months ended July 31, 2007, including a $192.8 million loss from Option One. Despite the extra charges, steadily getting out of the mortgage business cuts H&R Block’s long-term risk, and lets its focus on its core tax preparation, accounting and wealth management operations....

ADOBE SYSTEMS INC. $42 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 573.8 million; Market cap; $24.1 billion; WSSF Rating: Average) is best known for its Acrobat program, which lets users create electronic documents in the popular PDF format. However, Adobe gets nearly two-thirds of revenue from its Creative Solutions division, which help graphic designers create print publications and web pages. Adobe is starting to realize some of the benefits of its 2005 acquisition of Macromedia Inc., the developer of Flash. This program lets web page creators add animation and other features that make their sites easier to use. Popular sites such as YouTube use Flash to play videos and other content. Cellphones and other wireless devices that connect to the Internet represent a growing market for Flash. Adobe has licensed its mobile Flash technology to major cellphone makers such as Motorola and Samsung....

Sales of computer software could weaken over the next year, if a slowing economy prompts computer users to delay upgrades or new purchases. That’s why we feel investors should stick with leading software makers like these five, whose size and customer base will help them stay profitable and generate cash flow for new product development. However, we see only three as buys right now. MICROSOFT CORP. $34 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 9.4 billion; Market cap: $319.6 billion; WSSF Rating: Above average) is the world’s largest maker of computer software. Its flagship products, the Windows operating system and the Office suite of business programs, dominate their markets....

TD SCIENCE & TECHNOLOGY FUND $15.36 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W1P9. 1-800-386-37 57; Web site: www.tdcanadatrust.com. No load — deal directly with TD) invests mostly in U.S. firms engaged in the research, development and production of products or services related to science and technology. TD Science & Technology’s top holdings include: Microsoft Corporation, Google, Cisco Systems, Hewlett-Packard, American Tower, Qualcomm, Electronic Arts, Foxconn International, Adobe Systems, Marvell Technology Group, Samsung, Nokia, Intel and Apple. The fund’s gain in Canadian dollars over the last year was 11.0%. The Nasdaq index rose 6.9% in Canadian funds. The $115.3 million fund’s manager is well-respected U.S. mutual fund manager T. Rowe Price Associates. Its MER is 2.70%....

Many tech stocks have moved up lately, and the Nasdaq composite index is now at 2,859, its highest level since early 2001. Consumer spending for computers and electronics in the United States remains steady despite overall lower consumer confidence, due in part to higher gasoline prices and volatile housing markets. Spending by corporations for information technology products and services continues to rise steadily, along with the U.S. economy. The recent launch of Microsoft’s Window’s Vista operating system will likely prompt many businesses and consumers to upgrade to new computers and software designed to run on the new platform....