Is Adobe Targetting Google With Omniture Acquisition?

Adobe systems has purchased Omniture, a little known firm specialised in web analytics, for $1.8 billion as the company behind Photoshop and Flash re-engineers itself to become more competitive online.

Omniture shareholders were offered a substantial 24 percent premium for the company's share, something that went down very badly with Wall Street. Adobe shares are currently suffering a loss of 6.38 percent - around $1.13 billion - which cut the value of the company to $17.49 billion.

The purchase is Adobe's second largest after the 2005 buyout of rival Macromedia back in 2005 for $3.4 billion and while the reasons for buying a competitor are clear, the logic behind Omniture's transaction aren't.

Shantanu Narayen, CEO of Adobe, said of the purchase that it was a game changer for the company. He added that "Adobe customers are looking to us for solutions to deliver engaging experiences and more effectively monetize their content and applications online".

The deal comes as Adobe is suffering from the recession which is affecting both its quarterly sales and profits as customers stick to the older versions of its applications or others revert to pirated versions to cut costs.

Omniture charges its customers a monthly fee to provide a wealth of data about their transactions and how they interact with their audience via their websites.

Last year, this brought in $300 million although this could take a hit as economic woes continue and cheaper rivals such as Google Analytics or Yahoo Web analytics emerge.

Our Comments

Adobe could put a free version of Overture out there to introduce the solution to potential customers and to fend off competition from Google. It is also very likely that the solution will be tightly integrated with Adobe's own range of software as the company looks forward to build revenue streams impervious to economic cycles.

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