Few things have been more unexpected than Intuit’s Scott Cook kicking off a meeting this week with the accounting trade press by saying, “Mea culpa” for his allegedly not paying enough attention to accountants.
Intuit not paying enough attention to accountants? With more than 18,000 pro advisors and hundreds of thousands of copies of QuickBooks on the market, it’s a jarring statement. But there have been some strange things happening with Intuit. What’s up? Ostensibly, the press meeting covered a reorganization designed to put more executive oversight into this market, and a new product announcement.
But what’s up with CEO Steve Bennett getting a $3 million bonus, his picture on the cover of Business 2.0, and simultaneously, Intuit creates the Office of CEO, harnessing Bennett with founder Cook, now more visible than he has been in the last few years. The Office of CEO troika includes Lorrie Norrington, the executive vice president, who has been increasingly visible. Cook says that one goal was to bring Norrington’s talents to bear in more areas of the company. But the Office of the CEO looks like a dilution of the CEO’s job, while benefiting Norrington’s image as an up-and-comer.
Another strange thing--Best Software is acquiring Timberline Software, which makes construction software, a move that puts Best in direct competition with Master Builder, the construction software package that Intuit bought two years ago. In response, Carol Novello, vice president of the Intuit unit that handles Master Builder, sent out a letter calling Best’s move a “follow-the-leader" strategy. This isn’t the kind of tactic Intuit has normally pursued.
Why invite an unfavorable comparison? Intuit’s vertical market strategy hasn’t borne the fruit originally expected. At the press event at which Cook issued his literal “mea culpa,” Norrington agreed that the revenue from the vertical products---FundWare, Master Builder, MRI, and Eclipse--has been “lower than the original guidance.”
Lumped together, Intuit’s four vertical packages had revenue of $25.7 million for the April quarter. That annualizes to just over $100 million. But Intuit originally predicted that three verticals would add $95 million to $120 million for fiscal 2003. That prediction doesn’t include Master Builder, which seems to have been running $15 million to $18 million annually when it was acquired.
By contrast, publicly held Timberline had $61.9 million in revenue last year, far more than MasterBuilder, while MIP, the not-for-profit company that Best purchased in 2001, had about $15 million in revenue at that time. Moreover, there’s a lot you’d expect that we haven’t heard about from Intuit’s vertical endeavors: customer wins, additions to the reseller base, or significant new hires.
There seems to be some weakness in other areas. For the first time in 12 years in covering this business, I’m hearing competitors say they are taking business away from Lacerte (Intuit denies this). An official who left Intuit referred to Lacerte as a shrinking organization. I’m also hearing that the low-end software consulting business is weak on the firm side, so it would seem logical that this affects Intuit’s growth.
Finally, one of the most intriguing moves was Bennett’s announcement that he planned to stay another five years—at the same time the Office of CEO was formed. I can’t shake the feeling, as somebody noted, “Methinks the gentleman doth protest too much.”
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