Intuit unloads service, Wall Street takes stock up
Intuit reports a widening fourth-quarter loss and the sale of its back-end bill payment and private network subsidiary that had been a drain on earnings.
The financial software company reported a net loss of $21.9 million for the quarter ending July 31, compared with a $1.4 million loss a year ago. The company attributed $14.2 million of the loss to acquisition charges it took in the quarter.
Revenues rose to $91.1 million in the quarter, up from $72.4 million a year earlier.
Analysts attribute some of the loss to the company's Intuit Services, which it sold to CheckFree (CKFR) in a stock transaction worth $227.6 million.
"The loss was slightly larger than last year, but some of that is because of investments like the Services Corporation that weren't generating comparable revenues," said Peter Rogers, an analyst with Bear, Stearns & Company. "Their stock is up today because they got out of a business that Wall Street viewed as a drag on earnings."
Intuit's stock jumped 7 percent in heavy trading to close at 32-1/4 today.
Rogers noted, however, that the Services Corporation contributed less than one percent to Intuit's overall revenues. The services division provided a private network and bill-paying processing services to financial institutions, which, in turn, offered electronic banking and bill paying to their customers.
Jennifer Jones Hall, Intuit director of the company's Quicken Financial Network, said the move to sell the division was based on banks asking for an open exchange in order to deliver the information to their customers over the Internet.
Rogers summed up the transaction this way: "This was never their core business. Intuit's core expertise is providing software and services to consumers to help them manage their finances. The Services Corporation was like providing the plumbing."