On August 20, 1986, Adobe Systems held its initial public offering. Priced at around $11 per share, Adobe has split its stock six times since.
Adobe: The sleeper tech stock of 1986
1986 was a good year for tech stocks. Microsoft held its widely successful IPO that year, but so did Adobe, Oracle, Sun Microsystems, and Silicon Graphics. Sun and Silicon Graphics have faded away, but Adobe, Oracle, and Microsoft are all still going strong.
Adobe was easy to overlook in the class of 1986. Founded in 1982 by Xerox PARC alumni John Warnock and Charles Geschke, one of its early investors was Hambrecht & Quist, a venture capital firm that had also invested in Apple Computer and Miniscribe.
At the time Adobe went public, it only had one product. That product was a programming language called Postscript. Laser printers used it to describe fonts and graphics in a way that could scale smoothly, using lines and curves rather than pixels. Laser printers were still very new and unusual in 1986. An Apple Laserwriter retailed for $5,995 in 1986, so it wasn’t a mass-market product.
Adobe helped invent the product category of desktop publishing. But it was the easiest to overlook of the three companies involved. The key ingredients were a Macintosh computer, Laserwriter printer, and a program called Aldus Pagemaker. Adobe’s contribution was buried inside the Laserwriter printer and you didn’t interact directly with it, the way you did with the computer or printer or Aldus Pagemaker.
Adobe acquisitions
Adobe merged with Aldus in 1994 in a deal worth $525 million. This brought Pagemaker and Postscript under the same roof, along with Adobe Illustrator (introduced in 1987) and Photoshop (introduced in 1989).
Other notable Adobe products include Acrobat, introduced in 1993; Indesign, introduced in 1999; and Premiere, introduced in 1991.
Adobe is a company people love to hate, largely because of the cost of its software and use of a subscription model. But the 1994 acquisition of Aldus and 2005 acquisition of Macromedia eliminated two of the companies best positioned to rival it, making it very difficult for creative professionals to avoid Adobe altogether.
Adobe and the dotcom boom
Adobe profited during the dotcom boom, both from the investor hype and in selling software like Illustrator and Photoshop to new startups. On June 1, 1999, its stock was worth $9.06 a share, a disappointment considering 13 years had passed since its IPO at $11. And that was a rebound. In August 1998, it was trading at less than $4 per share. That price was so low that on August 18, 1998, Quark, the makers of QuarkXPress desktop publishing software, attempted to acquire Adobe. Quark abandoned its bid about a month later, on September 15, 1998.
By November 2000, Adobe’s stock was trading at $41 per share. But by August 2002, its stock fell to $8.35 a share. It didn’t reach $41 a share again until 2006 and didn’t maintain that level until March 2013. So while it’s easy to say if you’d invested $1,000 in Adobe’s IPO in 1986, or right after the dotcom bust, and held it, you’d be a multimillionaire today, it’s understandable why some investors overlooked the opportunity.
And while the takeover Quark didn’t go through with in 1998 looks today like a missed opportunity along the lines of Decca Records rejecting the Beatles, it wasn’t at all clear at the time what the floor was for Adobe, and Quark would have needed $2 billion to complete the deal. Since Quark was a private company, it wasn’t clear if they had the cash on hand or had the financing lined up.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.