ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, September 17, 1996 TAG: 9609170094
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
Intuit Corp. bowed to the pressure of the Internet Monday, dumping its electronic bill-paying subsidiary and changing strategies so its top-selling Quicken financial software works better with the global network.
The company also lost money as expected in its fourth fiscal quarter, which ended July 31, and forecast slower revenue and profit growth during the next 12 months.
Intuit sold its bill-paying unit, called Intuit Services Corp., to CheckFree Corp. for $227 million worth of stock, giving Intuit a 23 percent stake in CheckFree.
Most people encounter CheckFree when a store clerk uses it to validate a customer's check. The company also provides other processing and software services for businesses.
Intuit also said it would modify Quicken to allow computer users to connect directly with financial institutions through the Internet. Currently, people can use Quicken to bank electronically only if their bank has a relationship with Intuit and uses Intuit's private network.
The shift reflects both competitive pressures and a slowdown in the growth of new PC users at home.
In addition, some bankers have been worried that Intuit is trying to insinuate itself between banks and their customers. As a widely available network that's also used for many other purposes, the Internet presents a less costly way for banks to make an electronic connection with their customers, including those who don't use Quicken.
``The Internet is now becoming sufficiently secure and reliable to become the backbone for financial activity, and at the same time consumer access to the Internet has exploded,'' said Bill Harris, executive vice president of Intuit.
Analysts said Intuit was also feeling pressure from rivals such as Microsoft Corp. and IBM Corp., which last week announced a venture with 15 large banks to develop electronic banking products. Harris said the work of IBM and the banks would complement Intuit's own.
``The Internet is the dominant way people will want to connect to their financial institutions,'' said David Weisman, analyst at Forrester Research in Cambridge, Mass. ``Banks like it because it's lower cost, and consumers like it because there's more choice out there, rather than just one financial institution.''
Software market researcher Ann Stephens said Intuit continues to dominate personal finance software, responsible for 9 out of 10 sales, but that growth is leveling off.
Only about 350,000 of the approximately 10 million users of Quicken take advantage of its electronic payment features.
Separately, Intuit said its loss widened in the May-July quarter, the fourth of its fiscal year, after recording costs of buying Interactive Insurance Services.
Intuit lost $21.98 million, or 48 cents per share, on sales of $91.13 million in the quarter ended July 31. A year earlier, the company lost $1.43 million, or 3 cents per share, on sales of $72.40 million.
The performance met the expectations of Wall Street analysts. Intuit's stock closed up $2.12 1/2 to $32.25, a 7 percent jump, on the Nasdaq stock market.
LENGTH: Medium: 65 linesby CNB