Rafael Grillo

Intuit Screws Up, And H&R Block Will Profit

Barrons, Aoril 27th. "Intuit (INTU) shares are coming under pressure this morning after Jefferies analyst Ross MacMillan cut his rating on the stock to Hold from Buy, trimming his price target on the stock to $27, from $28.

MacMillan writes in a research note that the downgrade reflects new data that suggests the company will see a second consecutive year of declining ASPs in its consumer tax business - as well as unit share losses to its biggest competitor, H&R Block."

Sucker's Rally Approaching an End

Rally? I am not sure I would call the recent move a rally. We are stilll struggling to stay at Dow 8,000. Just 6 months ago 8,000 was unfathomable. For me, it was more a recovery of an irrational, panic-driven un-rally (yes, irrationality doesn't always have to be exhuberant). Does it mean we should expect further gains? Nope. Buit it doesn't mean we have to brace for doomsday either. At 8,000 we already are in bad shape. More than ever before, it is a stock-pickers market. Great time for a 25 yr-old to add to his S&P 500. Not so good idea for the rest of us. I agree with most: be nimble, remain unemotional and enjoy the volatility. It's going to be a trading range for a while. Don't waste your money trying to buy for the long-haul. Make the quick buck and call it a day. Inflation is coming (the only way to cope with the excessive leverage), so the pain is here to stay for a long time.

Intuit Screws Up, And H&R Block Will Profit

From Intuit's Q2'09 10-Q: "Total net revenue decreased $43.9 million or 5% in the second quarter of fiscal 2009 compared with the second quarter of fiscal 2008 ...Consumer Tax revenue decreased 25%, ...". And this is not even in the peak of the tax season. The jury is still out...


On Feb 20 07:29 AM Paul Price wrote:

> Where was the Bad news?
>
> Intuit (seekingalpha.com/symbo...): FQ2 EPS of $0.34 beats
> by $0.07. Revenue of $791M vs. $796M. Sees FQ3 EPS of $1.57-1.68
> vs. $1.67, and full-year EPS of $1.78-1.89 vs. $2.03. Shares +6.2%
>

How the Crash Will Reshape America

Socialism is a term that is being used very loosely these days. Socialism should not be confused with social justice and is certainly not regulation. Socialism refers to the ownership of the production assets by the State. Stricter, sensible regulation does not equate to socialism, nor do policies that promote a more just distribution of wealth. Frankly, we've been taught to irrationaly fear anything that even suggests socialism as fundamentally opposed to the political and economic freedom in which America is based. It is a remnant of Cold War rethoric. The terms was used during the political campaign as an emotional weapon against Obama (the same way Obama used an undefined "change" in his favor), and the fear stuck. Now, we can not even have a rational discussion about much needed up to date regulation or how to achieve a more just society without somebody wielding the term, thus closing the debate just based on emotional irrationality. The absence of regulation is anarchy, and the absence of social justice is the law of the jungle. The free market system, unchecked, leads to the type of crisis we are in. No Democratic governmet has been entirely liberal, the same way no Republican Government has been entirely conservative. Any attempt at being purist in that sense wouild lead to failure. Actually, the conflictive application of misunderstood dogmatic principles during the last administration (the conservative approach of reducing taxes at the same time that followed the very anti-conservative path of dramatically increasing the size of the Government) is one of the drivers of the current crisis. Let's please stop wrongly labeling initiatives just to dismiss them right away, and let's start having serious national debates about the right way (without labels) to comee out of this crisis as a stronger, mire just and viable society.

How the Crash Will Reshape America

Doomsday scenario? Nah. The world is still too dependant on the United States. NY was the financial capital of the world in through the 30's depression and still will be. Regulation as a killer? We've had regulation so far: it's outdated and hasn't been enforced. People want to read too much out of this financial crisis. There is going to be consolidation, streamlining and the players will change, but there will be a recovery. It will take years indeed. As indicated in the excerpt, the Rust Belt will accelerate its decline. Hardly a breakthrough prediction. Sun-belt cities doomed? They are still the future: aging population, renewable energy hubs, intellectual hubs. The real re-shape will come from a more austere and sensible lifestyle. If any, this will teach America a lesson in humility: no, we are not invulnerable; no, we can not play it alone; oops, we are not that rich; yikes, there is competition out there; gulp, we can't always get it our way. This realization, along with the drive and inventive of the American character, will make this country come strengthened and re-focused on the other side.

Intuit Screws Up, And H&R Block Will Profit

Of course the number will only go up! That is not the point. If you read carefully, I am referring to current Turbo Tax customers, and not making a generalization about the long-term trend of electornic e-fling. I am explaining the reasons exposed by the disgruntled customers to be dissatisfied. Even applying your own standard just for kicks, 40% (heck, half of that number!) not caring for e-filing and feeling that they are being charged for something they don't want still pretty much equates to a big "many".

On Feb 02 03:39 PM kylesch wrote:

> I'm not sure why you would say "not that many people care about e-filing"
> as I believe the IRS has reported that over 60% of filings were electronic.
> That number is only going to go up...
>
> lot's of assertions, not numbers.

Geithner's Vague Plan

How to fix an insolvent bank system? Everyone is looking at the Government to quickly solve a problem created by the populist policies of the past administration and the irreponsibility of the private sector. I wouldn't want to be in Geithner's shoes. It is a horribly complex problem. There are not silver bullets. What I find outrageous is the passivity of the the business leaders in stepping up and proposing alternative solutions that go beyond extending the hand and asking for money. I'd like to see the Lewises, Dimons and rest of financial geniuses getting together and explaining how they will work together to get out of the mess they got us in. I am afraid the economic malaise will just have to follow its course, and it will take years. In good economic theory, Government spend and heavy investment is the way out of a recession/depression, but that takes time. The economy will have to re-set at lower levels of living standards and the tax burden will be felt for years. Greenspan's easy money and Bush's tax cuts and deep deficits propelled this fantasy bubble that just burst. Part of the solution will be higher interest rates and higher tax rates. It is unavoidable. We should be grateful if we can avert a depression.

Online Ad Revenues Up: Is the Worst Over?

In a tough economic situation, advertisers indeed cut their advertising budgets. But they don’t eliminate them. They can’t afford to. They need to keep selling! If any, as an advertiser you re-direct your reduced budget to the most effective touchpoint you have available. If you had campaigns going in different mediums, you focus on the most effective ones and cut the rest. Search advertising raises to the top in a situation like this. And If you had campaigns going in Google, Yahoo and Microsoft, you cut the last two and put all your money behind Google. I expect to see an increase in Google's share in the forthcoming quarters.

Intuit Screws Up, And H&R Block Will Profit

I am glad to see the string of comments this article generated. I want to refer specifically to two of them: Paul Price's: there are two ways of evaluating a potential investment: a) based on what has happened (numbers); and b) based on what you expect to happen (which would eventually drive the numbers). The performance of most companies -if not all- depends on how well they meet their customers demands and expectations. If for whatever reason an action of the company undermines its ability to satisfy its customers, it is to be expected that the revenue those customers generate will be disrupted, wouldn't you agree? That is the marketing side of the business equation. I believe an attentive investor will pay as much attention to what a company is doing to efectively attract and retain customers as it would to its financial statements. Any threat to that revenue stream should raise a red flag, and even more when you see its closest competitor on its heels doing the right things to catch and retain those dissatisfied customers. In the case of Intuit, I am raising the red flag. In my artcicle, I am not asserting that Intuit lost market share: I am expecting that it will.

Mr. Meighan: I commend your involvement in the multiple forums I've visited to assess the competitive situation in the tax software business I am addressing in this article. Indeed, you listened to your customers and you corrected many of the issues they raised. But my article is not challenging the Turbo Tax benefits that you enumerate in your comments. That is for the consumers to judge. My conclusion is that the magnitude of the negative reaction -perhaps exaggerated, but absolutely real- from your customers to the attempted changes in the Turbo Tax 2009 model, along with the aggressive marketing of Tax Cut, will erode Turbo Tax's franchise in a significant way. Time will tell whether my estimation was accurate, but from the investment perspective, my point is this is a risk to be seriously taken into consideration.

On Feb 02 10:59 AM Paul Price wrote:

> It doesn't appear you have any figures to back up your assertions
> of lost market share for Intuit.
>
> Where are you getting the data your article refers to?
>

Do We Need a Car Czar, Or Is That Just an Excuse?

For as long as the promise is Government money is lurking, everyone will want a share of it, and by definition, the endless discussion will be about who gets the biggest share (Companies, UAW, etc.). We need to face reality: Chrysler is a failed enterprise, GM is a dinosaur with too many commitments to succeed and Ford seems to be the only company that seems to be scoring enough points to get a chance at long-term sustainability. No bailout package will change that. Let's save the taxpayers dollars for taxpayers business and let's enforce the orderly liquidation of Chrysler and the downsizing of GM. The politicians would spend their time more wisely developing a special Car Industry Re-sizing Bill in order to achieve that (if Chapter 11 is not appropriate enough for whatever reason) than continue discussing throwing good money after bad.

U.S. Debt Default, Dollar Collapse Altogether Likely

As scary as the scenario described in the article is, it is absolutely plausible. I am not sure everyone understands the roots of this economic disaster. Simply put, we've relinquished our industrial might, our true productive capacity and have fundamentally given it away to mainly China in our pursuit of profits. We've been living in a house of cards getting goods in exchange for IOU's for over two decades. And now that we are being asked to pay, we want to pay with more IOUs. Ah, America! No different than the rich kid that tried to live the big life with the fortune the grandfather created, without really working to preserve and grow that fortune. He just though he was entitled to that lifestyle. "Hey, I'm the richest and most powerful dude around" he'd brag. He ran out of money, but refused to change his lifestyle. He kept getting loans to sustain his lavish habits that lenders were happy to provide believing him rich. At some point though, the lenders doubted and stop the lending. The rich kid was no more. How many generations would his descendants require to rebuild the lost fortune? Because the only way to rebuild the might is not by spending (everyone talks about estimulating spending!), but by investing: building infrastructure, rebuilding productive assets and becoming self-relaint again. Because guess what: we aren't the richest and most powerful dude around anymore.

Four Stocks I'm Watching This Week

Interesting comments. It is surprising the see ERTS at this price level. However, I gave up on ERTS long time ago. It seems that creativity has abandoned that company, and they haven;t had a significant blockbuster since Battelfield 2. The re-hashing of old titles that gamers are not ineteresting in anymore is a losing strategy. ERTS lost its nimbleness and with it, its growth stock status. I much prefer ATVI at this pint.

GE is a comatose behemoth that has lost its north. The stock has been bleeding value since Immelt took the helm. The current crisis has only exacerbated the decline. GE needs a new, more focused CEO to recover its mojo. A breakup should be in their strategy, spinning off their financial arm.

WFC: It will lead the return of the Financials. Accumulation at this point is a smart strategy.

Motorola Q4: In Line, Suspends Dividend to Conserve Cash

Another disappointing quarter at Motorola. This company can't find its way. In my view, what Motorola has been lacking is sound marketing. Motorola was in a similar position several years ago (losing share and lack of personality), until they put a tremendous effort behind two complementary and brilliant moves: the launch of the "Hello Moto" campaign and the development of Razr. Those two events set Motorola as a hip, in-the-know brand. After that, it is very obvious that the company has been taken over by the engineers. Motorloa has become a completely soul-less brand. Along with relevant products, Moto needs to devote energy and talent to rebuild its equity. They are still in time to do it; it still is a respected name. But time is of the essence.

3 Reasons I Think a Bull Market Rally Is Imminent

The depth of the finacial and economic crisis is such that I don't envision a sustained bull market until well into 2010 or beyond. This is not your normal recession. The economy needs to correct years if not decades of excess. It needs to resettle at a level sustainable by true productive output, and even that needs to account for the re-payment of the gigantic debt that financed our excessive living standard of the last decades. That means dramatically lower real income for consumers and, correspondingly, far lower revenue for companies. The economic shockwaves are not over. Everyone is looking at the Government to bail the economy out, but the Government has not limitless resources. Taxes will have to increase, further dragging recovery. We can not borrow our way out of a crisis created by borrowing in excess. As much as it hurts, as an economy we're toast for the next decade. Yes, there will be bear rallies and you could still make money in those, but as a long-term generation of wealth, the stock market will be compromised for the years to come. If any, it will be a stock-pickers' market. Commiting to or paying atention to broad indexes will be foolish. What it pains me is that those who have been disciplined is saving and investing are the ones who will pay for the party, while the irresponsible people who lived large and accumulated credit card debt will simply be bailed out.

No Japanese-Style 'Lost Decade' Seen for U.S. Economy

The depth of the finacial and economic crisis is such that I don't envision a sustained yet moderate bull market until well into 2010 or beyond. This is not your normal recession. The economy needs to correct years if not decades of excess. It needs to resettle at a level sustainable by true productive output, and even that needs to account for the re-payment of the gigantic debt that financed our excessive living standard of the last decades. That means dramatically lower real income for consumers and, correspondingly, far lower revenue for companies. The economic shockwaves are not over. Everyone is looking at the Government to bail the economy out, but the Government has not limitless resources. Taxes and interest rates will have to increase, further dragging recovery. We can not borrow our way out of a crisis created by borrowing in excess. As much as it hurts, as an economy we're toast for the next decade. Inflation will be a necessary evil in order to reset the levels on internal and external debt. Yes, there will be bear rallies and you could still make money in those, but as a long-term generation of wealth, the stock market will be compromised for the years to come. What it pains me is that those who have been disciplined is saving and investing are the ones who will pay for the party, while the irresponsible people who lived large and accumulated credit card debt will simply be bailed out.