Intuit takes 12-percent plunge after saying it will sell Quicken, QuickBase and Demandforce
Shares of Intuit dropped 12 percent Friday after the maker of TurboTax software surprised Wall Street by saying it plans to sell several businesses, including its consumer finance program Quicken.
Like many other software makers, Intuit is shifting its business away from selling software and toward cloud-based subscription offerings. Along with Quicken, the company said it will sell Demandforce, which provides online marketing and communication services for small businesses, and QuickBase, a software platform that businesses use for project collaboration and management. The planned sales affected its fiscal fourth-quarter results and Intuit expects them to reduce its revenue in the new year by about $250 million.
Intuit Inc. shares had been trading around all-time highs, and they took the biggest loss on the S&P 500 index in afternoon trading, dropping $12.31 to $90.62. Earlier the stock fell to $85.11, its lowest price since January.
The Mountain View, California-based company reported its fourth-quarter results and announced its plans after the markets closed on Thursday. With Quicken, Demandforce and QuickBase counted as discontinued operations because of the planned sales, Zacks Investment Research said Intuit's quarterly revenue fell $44 million short of analyst estimates.
The company forecast an adjusted profit of $3.40 to $3.45 per share and $4.53 to $4.6 billion in revenue for the current fiscal year. Analysts had expected $3.82 per share and $5.04 billion, according to FactSet.
Stifel analyst Brad Reback said the decision to sell the businesses was "unexpected" but called it the right move.
"While these businesses continue to perform well, management believes these offerings are not supportive of the company's transition to a cloud-based business model," he said.
Jefferies analyst Brad Zelnick also took a positive but cautious view of Intuit's decision.
"While Intuit's M&A track record is questionable at best, we respect the company's willingness to take decisive action," he wrote. Subscription growth for Intuit's QuickBooks Online small business products is continuing to rise, he said.
Reback rates the shares "Hold." Zelnick kept a "Buy" rating but cut his price target to $115 per share from $120.