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."

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%
>

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.

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?
>