Adobe Systems said on Monday it will replace Chief Executive Bruce Chizen with Chief Operating Officer Shantanu Narayen, a surprising move that sent the software maker's shares down 3 percent.
Narayen, a former Apple executive who has been with Adobe for nearly 10 years, will succeed Chizen on Dec. 1, the company said.
Adobe said Chizen, who has spent 14 years at the maker of Photoshop and other software, will remain on the board through the spring of 2008 and continue in a strategic advisory role through the end of fiscal 2008.
"Nobody ever likes any sort of transition, but this is definitely the guy to take it on," said Gene Munster, an analyst with Piper Jaffray. "The business is doing very well. I think this is just a case of a CEO who is retiring."
Adobe, whose Photoshop is used to edit photos and Acrobat to create, edit and exchange documents over the Web, also said it expected fourth-quarter revenue to be near the high-end of its target range of $860 million to $890 million.
Wall Street was looking for fourth-quarter revenue of $884 million, according to Reuters Estimates.
"For me personally, the time is right for a transfer of leadership and I look forward to supporting Shantanu as he takes on his new responsibilities," Chizen said in a statement.
Narayen held several management positions at Apple before founding digital photo-sharing software company Pictra in 1996.
Adobe shares fell to $40.85 after the news was announced. In regular Nasdaq trading, the stock fell 2.4 percent to close at $42.19.
Under a prearranged trading plan, a trust in Chizen's name sold 189,000 Adobe shares on Nov. 1, according to regulatory documents filed with the U.S. Securities and Exchange Commission early last week.
The trust acquired 189,000 shares after exercising stock options for about $27.83 per share, the SEC documents show. The trusts sold them at prices ranging from $46.90 per share to $47.85 per share.
Shares of Adobe , which finished down 2.43 percent Monday at $42.19, were down 3.4 percent in uneven after-hours trade.