Keep On Keepin' On

Adobe Systems continues to reinvent itself as it keeps pace in the crowded software field.

- Peter CarBonara

Adobe Systems is king of its hill in content-creation software. No one comes close to offering all that it has: Photoshop, Acrobat and Illustrator. Its net profit margin this year will be 28.7%, predicts Value Line, better than the margin at Microsoft. Its shares are up 1,000% over the past seven years.

Why, then, is Adobe running scared? It veered off into Web analytics in 2009, paying about $1.8 billion for a firm (Omniture) that had only $296 million in revenue. Then it wanted to get into ecommerce, and after being outbid two years ago by Salesforce in the auction for cloud-based Demandware, it had to settle this year for second-choice Magento, at a cost of $1.7 billion. (And in September Adobe agreed to acquire Marketo for $4.75 billion. The San Jose firm makes business-to-business marketing software that helps brands track their customers online.)