they didn't quite come out and say that, but here's the story as i know it: macromedia was typically, like most major software developers, on an 18 month release cycle. you could usually expect to see a new version of flash every other march and every other september, or thereabouts.
the MX initiative was
huge for macromedia and they upped the schedule for dreamweaver and fireworks (they still missed the release date). flash MX debuted about on time, studio followed a few months later. it was a gigantic success. notably because the price to get in to studio was ridiculously cheap if you had a flash MX license (i think it was $200 for the entire suite). when i say big, i beleive that the MX suite led to macromedia having their best year in history. flash is suddenly becoming ubiquitous and macromedia see dollar signs.
at the same time macromedia was working in the background on a whole slew of "flash based" things. they were really pushing for flash to become a platform, like java. so in the space of about 12 months we get: flash communication server, flash remoting, flash paper, central, flash lite, flex and so on. unfortunately not only did this take away resources from their core products (which were already showing signs of neglect) but also spread their talent base way, way too thin. flash remoting is almost still borne with the advances in MX 2004, communication server was a neat idea, but in real world use it didn't quite fly. flash paper was a joke as was central, etc...
so then 2004 comes out, and believe me when i say it wasn't ready. the developers were somewhat indignant about the countless bugs, i don't know if this was because they felt the whips of marketing/managers or if they genuinely felt it was a good product. anyway it's released and it is the buggy, document-less, slow and bloated piece of junk we have today. word spread really, really fast about exactly how bad it was and how the feature set just wasn't compelling. additionally the upgrade price was really expensive compared to MX. the result, come their quarterly financial report they were way behind what they expected. in the meeting with analysts they played down how bad the software was, but did mention it (rare, especially as MM has stated publicly that "they don't do dot releases"). amongst developer channels MM started being much more open and showing off their work and where they're at. they've released a decent upgrade to flash (7.2) that makes things okay, but still not great.
i do think that they've learned their lesson, though what reaction they're capable of is yet to be seen. i am cautiously optimistic based on the information they've released so far:
http://www.markme.com/flashteam/