The stock price of Adobe Systems shot up last week amid speculative reports that Microsoft was interested in acquiring the software company best known for its Flash and Creative Suite technologies.

Yet the companies could meet their goals through partnership rather than acquisition, according to industry analysts.

After Microsoft CEO Steve Ballmer sat down with his counterpart from Adobe, Shantanu Narayen, talk was that the companies were discussing a mobile strategy and how to beat Apple.

“That’s credible,” said IDC analyst Al Hilwa. “Ballmer wanted to see if Adobe was open to [an acquisition], and it wouldn’t be out of the realm of possibility, but I suspect that is not necessarily what will end up happening.”

Rob Enderle, principal analyst at The Enderle Group, also said an acquisition is unlikely. “Big mergers usually result when one or two parties in the merger believe that the firm can’t survive without it, or where a new CEO needs to distract the market for a period of time while they figure things out,” he said. “Neither seems to be the case here, making it seem very doubtful that the two firms could get the internal approvals needed to get this done.”

Certainly, one thing standing in the way of an acquisition is antitrust regulation. Microsoft is the largest software seller in the realm of desktop authoring and publishing software, with revenues of US$11 billion for its Office suite of products, according to IDC figures from 2009. Second in the category is Adobe, which sold $2 billion in software in 2009. Third is Apple, which sold $250 million that year.

“It suggests a level of synergy [between Adobe and Microsoft], but also the market would be almost all Microsoft,” Hilwa said.

Meanwhile, Microsoft is launching a big play into the mobile device space with its Windows Phone 7 platform, a clear competitor to Apple’s iPhone and Google’s Android. Apple originally would not permit any non-native applications to be used on its devices, leaving Flash applications off the platform, but “[Apple CEO Steve] Jobs realized his competitors could beat him up with that. It’s not clear what Apple gains from not having Flash, but either way, Jobs blinked,” said Hilwa. Apple now permits developers to use Flash to create applications sold in its App Store that are compiled to work on the iPhone with Adobe Packager software.

While Apple was denying Flash, “Google had Adobe’s back with Flash,” Hilwa said. “They created a partnership with the Chrome browser, which helped comfort people.” Despite the fact Google and Microsoft are very competitive, “an outright acquisition might be a problem” in this regard as well, he pointed out.

The mobile space continues to lag in development-platform and language neutrality, so a partnership between Adobe and Microsoft could up the ante in that regard. “With HTML5 coming, the future of [Microsoft’s] Silverlight and Flash is doubtful,” said Enderle. Adobe claims that Flash is currently running on 99% of all Internet-enabled desktops in mature markets.

“However, a combined effort to create the best HTML5 implementations and tools based on their Silverlight and Flash counterparts, coupled with conversion tools that worked with all three, could be very profitable.”

An Adobe-Microsoft partnership could send the message to developers that “no matter what device you’re writing to, we’re open to you,” Hilwa said.

He also pointed out that smartphones and desktops are not the extent of Adobe’s reach with Flash. “They are building the broad capabilities to be on most devices, and the Open Screen Project is working to put Flash in places you wouldn’t expect it,” he said.

That initiative, led by Adobe but joined by other industry leaders, was conceived to bring rich multi-screen experiences built on a consistent runtime environment (Flash) to users, either via the Web or in standalone applications. Microsoft, too, is looking beyond the computer for potential software markets.

Microsoft has little in the media-creation space, and Adobe hasn’t yet figured out Software-as-a-Service or cloud services, so the combination could result “in something that expanded Microsoft’s market and better assured Adobe’s future,” Enderle said.

These things, Enderle concluded, “work better as a partnership than a merger.” And Hilwa said that in this economy, companies are sitting on a lot of cash, and “they need to figure out how to use it to have assets in play when the markets improve.”