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Intuit blames Y2K for poor sales

By Bloomberg News March 15, 2001, 3:05 p.m. PT

Intuit, the No. 1 maker of personal-finance software, said Thursday that revenue in its fiscal third quarter and fiscal year will miss forecasts because of sluggish QuickBooks software sales related to Y2K purchases.

Sales in the quarter ending in April will be $425 million to $450 million. Analysts polled by First Call had expected sales of $467.5 million.

Demand for the company's QuickBooks software for small businesses is lagging because many customers upgraded to avoid potential problems related to the Y2K computer bug, Intuit said.

The company also pegged the previous quarter's sluggish QuickBooks sales on the long-forgotten Y2K panic.

QuickBooks is the key to Intuit's plan to link accounting data with newer online business-management services. The company also said advertising on its Web sites has slumped.

''We're a little below traction,'' Chief Financial Officer Greg Santora said at a conference with analysts at the company's headquarters in Mountain View, Calif.

Less than a month ago, the company said it would stick with its fiscal 2001 sales and earnings forecasts.

The company forecast percentage growth in the middle to high teens for QuickBooks upgrades, compared with its usual 20 percent to 30 percent, Intuit said.

Intuit also blamed the slowdown on lower-than-expected sales in Japan, though it didn't give specific details. The company isn't cutting spending, Chief Executive Steve Bennett said.

For the fiscal year ending in July, the company now expects sales of $1.26 billion to $1.3 billion, compared with its earlier forecast of $1.32 billion to $1.34 billion. Analysts had forecast sales of $1.32 billion.

Operating income, excluding items, will rise 32 percent this fiscal year, in-line with the company's earlier forecast, and at least 25 percent to 30 percent next year, Intuit said.

The company expects 2001 operating income of $205 million to $213 million, excluding acquisition costs and investment activity. Operating income will rise at least 20 percent over the next three fiscal years, Intuit said.

Intuit's revenue in fiscal 2002 will rise 15 percent to 20 percent, Bennett added.

Newer versions of QuickBooks can be used to link to Intuit's Web services, such as payroll processing or buying office supplies. That link gives Intuit more opportunities for sales to existing customers. The company said 29 percent of its sales this year will come from all of its Web services, including QuickBooks and electronic tax filing.

Out of 3 million QuickBooks customers, about 1 million can now access most of Intuit's Web services, said James Marks, an analyst at Credit Suisse First Boston.

Copyright 2001, Bloomberg L.P. All Rights Reserved.

-- Martin Thompson (, March 16, 2001

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