Adobe CEO steps down

Software maker Adobe Systems Inc. CEO Bruce Chizen said Monday he would step down, and President and Chief Operating Officer Shantanu Narayen will replace him on Dec. 1.

Narayen will retain his title as Adobe's president and join its board in December, Adobe said. Narayen has been president and COO of the maker of the popular Photoshop, Flash and Acrobat programs for almost three years.

Narayen joined Adobe in 1998 as vice president and general manager of engineering. In 1999, he was promoted to senior vice president, and in January 2005 he became president and chief operating officer. Before Adobe, Narayen co-founded Pictra Inc., a digital photo sharing software company. He also served as director of desktop and collaboration products at Silicon Graphics Inc. and was a senior manager at Apple Inc.

Wall Street reacted negatively to the loss of Chizen, a blunt-speaking executive known for keeping Adobe's morale high.

The stock closed Monday at $42.19, down $1.05 or 2.4 percent as news dribbled out. After the CEO's departure was formally announced, the stock lost another $1.51 in after-hours trading.

Chizen, who's been at Adobe for 14 years, will remain CEO until Nov. 30, then work halftime as a strategic adviser until the end of fiscal 2008. He will also serve on Adobe's board of directors through the spring.

Chizen, 52, who has served as Adobe's CEO for seven years as the company collected record profits, said in a phone interview he was stepping down "to take a break."

"This will be the first time in my life I've had a chance to take a step back and figure out what I want to do for the rest of my life," Chizen said. "As much as I love Adobe products and employees, I didn't want to find myself at 55 saying, 'Gee, I wish I had done something else besides Adobe.' The role of CEO is all-consuming."

The company is expected to file paperwork with the Securities and Exchange Commission about the personnel switch on Tuesday.

The San Jose-based software maker has been on a tear in recent quarters, launching a slew of new programs for "creative professionals" — editors, videographers, Web designers and other workers willing to pay top dollar for sophisticated software. Besides Photoshop, Flash and Acrobat, the company's flagship products include the popular Creative Suite, which was updated in April and sells for $1,599 to $2,499.

Adobe reported in September that its fiscal third-quarter profit more than doubled on a 41 percent revenue increase, and bullish executives have predicted a sustained double-digit growth spurt. The company reported a record $851.7 million, up from $602.2 million in the third quarter of 2006.

"I'm not leaving under any cloud. There's no severance agreement. I'm taking a break, and the reason I feel comfortable taking a break is because the company is in such good shape," Chizen said.

Narayen, who holds five patents and degrees from the University of California, Berkeley, Bowling Green State University and Osmania University in India, called Chizen a mentor and friend.

"The reality is that Bruce and I have partnered over the past few years over fundamental strategy," Narayen said Monday in a conference call. "With five years of double-digit growth, it's clear to me that our strategy is working."

Piper Jaffray analyst Gene Munster said Chizen has done "amazing stuff" — particularly after Adobe's $3.4 billion purchase of Web software maker Macromedia Inc., which closed in December 2005. At the time, pundits speculated that the huge acquisition would sidetrack Adobe and give critical advantages to Microsoft Corp., its main rival.

"This has nothing to do with the state of the business. It has to do with Bruce and the next chapter in his life," Munster said.

Chuck Geschke and John Warnock, Adobe's co-chairmen, said in a statement that Chizen "helped transform Adobe from a company that was known mainly for its popular design products into one of the largest and most diversified software companies in the world."

Chizen said he's been talking to the board of directors for several quarters about his desire to step down. The Los Altos resident plans to stay in Silicon Valley — though he hopes to spend more time in his native New York as well.

"I'll be attending to long list of things my wife would like me to do — but I refuse to do laundry," he quipped.