Intuit: Leading the E-Finance Revolution

Intuit (INTU)
has always been a pioneer of wedding technology and personal finance. It
was in 1983 that Scott Cook started the company, because his
wife was aggravated when she was trying to balance the family checkbook.
Since then, millions of people have been balancing their
checkbooks because of Intuit, as well as preparing taxes, planning for
retirement,
budgeting, and on and on.

However, the company has been primarily a traditional software
company with distribution through retail outlets and mail order. But of
course, the Web has presented tremendous opportunities for the company —
which
Intuit has been capitalizating on — becoming an e-finance powerhouse.

Now, the company is starting to see the results of this. In its latest
quarter, the company reported revenue of $163.1 million, which was up 46 percent
from the same quarter a year ago. What’s more, the Net accounted
for 19 percent of all revenues.

The company has leading positions in the main personal finance categories:

Small Business: QuickBooks is a small business accounting application,
which has 80 percent market share in the US. Part of the package is a
Net-based payroll system, in which Intuit processed $342 million this year
— which is up 10 times from last year.

Tax Division: The main sources of revenues for this division comes from
TurboTax and MacInTax — accounting for 70 percent of the market. Of
course, there is also online tax preparation.

Consumer Finance: This includes the Quicken product line, as
well as Quicken.com. Although the Quicken product faces many challenges,
including
Microsoft Money. What’s more, Quicken-type functionality is becoming more
present on the Web — for free.

However, Intuit has positioned Quicken.com as a premier destination point
for personal finance. In October, page views were 162 million, which is up
from 55 million in October 1998.

One of the most compelling services is the Intuit bill payment system. A
recent study shows that 55 percent of online users would be interested in such a
service (there are about 63 billion bills issued in the US every year). In
fact, Intuit signed a blockbuster deal with AOL, in which AOL agreed for
five-years to provide Intuit bill payment services on an exclusive basis.

But the company is not growing everything internally. Intuit has
been aggressive with investments in related e-finance companies. For
example, Intuit has stakes in Mortgage.com (MDCM),
Homestore.com (HOMS), and
QuoteSmith (QUOT).

Conclusion

One possible play is a spin-off strategy. For example, Intuit could issue
Quicken.com or QuickenMortgage.com as IPOs, which would help
unleash shareholder value. Or, the Net part of Intuit’s business will
continue to propel growth. Any way, it should be good news for investors.


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