Intuit tops 4Q forecasts, predicts faster growth in 2001

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Intuit (Nasdaq: INTU) beat the consensus estimate in the fourth quarter and predicted stronger growth in the current fiscal year.

After market close Tuesday, the vendor of personal finance software reported a fiscal fourth quarter loss of $8.2 million, or 4 cents per share, excluding special charges and one-time events. First Call's survey of 17 analysts predicted a loss of 9 cents per share for the quarter ended July 31.

Including acquisition-related charges, reorganization costs, and investment gains and losses, Intuit earned $17.1 million, or 8 cents per share.

Shares of Intuit rose to 49 in afterhours trading on the Island electronic communications network, immediately following the release of quarterly results. Intuit stock closed Tuesday's regular trading at 46 1/16, down 3/16 for the session.

Intuit on Tuesday raised its expectations for fiscal 2001. The company now sees revenue growth of 22 percent and pro forma opeating income growth of 30 percent for the year, compared to 16 percent and 13 percent respectively in fiscal 2000.

That increased growth rate will come not only from Internet efforts, but also from a rebound in Intuit's traditional desktop software business, an Intuit executive told ZDII.

Although Intuit's Web divisions grew faster, the core desktop business also saw lower sales in 2000 because Intuit gave away free copies of its software as part of Y2K programs earlier in the fiscal year, said Raymond Stern, senior vice-president of corporate strategy and marketing.

"We believe that we cannibalized some of the potential upgraders that we might have gotten and would typically get in any given year," Stern said, in a telephone interview.

Fourth quarter revenue fell year-over-year to $162.3 million from $168.3 million. The expected decline stemmed largely from the closure of 22 branches of Intuit's Rock Financial acquisition and lower overseas revenue because of different launch dates for new European products, the Intuit said. The company also saw stronger-than-usual sales of Quicken and QuickBooks earlier in the year because of Y2K-related buying.

At least one analyst, William Wong of Josephthal & Co., predicted fourth quarter revenue of $150 million for Intuit.

For the full fiscal 2000, Intuit earned $134.2 million, or 64 cents per share, excluding special charges and one-time events. Revenue for the year increased 16 percent year-over-year to $1.1 billion.

"We had a great year," Stern said. "We exceeded expecations and we exceeded our own internal financial target."

The traditional software business grew at 14 or 15 percent rate in fiscal 2000, Stern said. That includes products distributed electronically through online downloads.

Intuit reported Web-related revenue of $294 million for the full year. Based on the company's previous report of Internet revenue exceeding $242 million for the first nine months of fiscal 2000, Intuit saw Web revenue of nearly $52 million in the fourth quarter.

Online advertising generated $74 million in revenue in fiscal 2000. Transaction revenue on the Internet totaled $112 million. Those two businesses combined grew more than 90 percent during the year, Stern said.

Three of Intuit's eight Internet units reported earnings for the full year, the company said. Those profit generators included Quicken TurboTax for the Web, QuickBooks Internet Gateway and Intuit's electronic tax filing business.

Intuit's online mortgage business will become profitable sometime in fiscal 2001, Stern said.

"That is one that's going to turn the corner next," he said. "Each of our (Internet) businesses is on a different time horizon for profitability. The competititve dynamics in these markets are so different that we will need to make investment decisions over the year."

The company expects in fiscal 2001 to double its investment in new Internet products and services.

The company ended 2000 with $1.5 billion on cash and short-term securities. Intuit plans to generate $65 million in interest income in fiscal 2001.>