Apple Puts Its 16.4% Stake in Rival Adobe Up for Sale
Apple Computer Inc. said Thursday that it will sell its stake in Adobe Systems Inc. to take advantage of the large rise in the software company’s stock and because Apple has embarked on a path that will put it in direct competition with Adobe.
Apple is Adobe’s largest shareholder, with 3,423,792 shares, or 16.4% of the company’s stock outstanding.
Apple bought the shares in November, 1984, for about $2.5 million in connection with a product development arrangement between the two firms. The shares are now worth about $91 million, Apple said.
The news hit Adobe’s shares hard, knocking $2.125 off the stock to $24.50 in the over-the-counter market. Apple Computer rose 75 cents to close at $41.25.
Prudential-Bache Securities analyst Kimball Brown said investors were disappointed because the sale by Apple would flood the market with Adobe shares. “You’re throwing (nearly) 3.5 million shares into the marketplace that wasn’t in the float previously,” he said.
The shares will be sold to Morgan Stanley & Co. and Hambrecht & Quist Inc. for resale to the public.
Adobe’s Postscript software is used to create and print typefaces, or fonts, on personal computers and is used widely with Apple’s Macintosh computer and laser printers.
On May 9, Apple announced plans to develop a rival language that it hopes to include in the next major release of Apple’s Macintosh System Software.
Although many users will prefer to stay with Adobe’s Postscript, Apple’s new product could hurt Adobe’s sales during the next three to five years, Brown said.
Dependence Decreasing
In a separate statement, Mountain View, Calif.-based Adobe said it believes that the sale’s impact on its revenue will be gradual and that it has been broadening its customer base and product offerings.
It said its dependence on Apple has been decreasing. For example, in the fiscal year ended Nov. 30, 1986, business from Apple accounted for 84% of Adobe’s revenue.
But two years later the figure fell to 33%, and for the first half of the current fiscal year Apple represented only 29% of Adobe’s total revenue.
