Acquisitions Aside, Seasonality Should Continue To Prevail With Intuit

Includes: DGIN, INTU
by: William Trent, CFA

Last week Intuit (NASDAQ:INTU) offered about $1.35 billion for online banking services provider Digital Insight (OTC:DGIN), based in Calabasas, Calif. The deal, expected to close in the first quarter of 2007, will bring Digital Insight’s operations into Intuit as a new financial institutions business unit.

This week they are upping their acquisition payments to an even $1.5 billion or so.

Intuit to buy Electronic Clearing House for $142M

Mountain View-based Intuit and Camarillo-based Electronic Clearing House Inc. (NASDAQ:ECHO) said Intuit will pay $18.75 per share in cash in exchange for each share of Echo common stock. That’s about 15 percent above Echo’s closing price Thursday of $15. Echo provides end-to-end payment processing products, including check and bank card processing as well as check verification, collection, and guarantee services and automatic clearing house capabilities.

Whether or not Intuit makes a splash in online banking services, we continue to believe Intuit’s stock price will follow a seasonal pattern. If anything, the acquisitions will give traders an extra excuse to sell in the short term.

INTU 5-yr chart:

INTU 5-yr chart

Disclosure: author owns Intuit put options.

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