In Focus

Even A Twit Can Use Intuit

Today is my son's fourth birthday. Happy Birthday Tanner! (He can't read yet, but someday he may look into the archives.) In other news... my husband is back in Georgia again, shooting that movie with Mel Gibson. He returns tomorrow and on Friday we have our tax appointment with our trusty accountant. I get heart palpitations every time I think about it. I am such a procrastinator!

Once again, two days before the appointment, I find myself totally unprepared. I have a sloppy stack in the corner of my office where I fling anything that appears even remotely tax-related. Since my husband and I are both actors, the W-2 thing is sort of out of control. Actors are like independent contractors, often having many different employers throughout the year, unless, of course, you're lucky enough to be a regular on a series. Then there are those questionable tax deductions... Given the roller coaster ride our incomes have been on since we married, the IRS saw fit to audit us three times! Guess what? We won all three. I could thank my accountant, but the real winner was Quicken from Intuit (Nasdaq: INTU).

Back in 1994, when I bought my first computer, my system came pre-loaded with Quicken. I didn't ask for it, but looking back, it was the most valuable part of the whole package! From checkbook balancing to reconciling and running net worth reports to tax reports, everything has become as simple as the click of a button... okay, several clicks. The man I really need to thank is Intuit co-founder, Scott Cook. Want to know why he was motivated to completely revolutionize people's financial lives? Because in 1983 he decided he could no longer watch his wife pay bills painstakingly by hand. What a good egg! He founded the company with Tom Proulx and their first product, Quicken, came to fruition. With the onslaught of the internet, in 1995 the company added online banking and bill payment. I haven't used those options, however, I do love the products from their successful financial supplies business. They sell paper checks, forms and envelopes. You just slide those checks right through your printer. Believe me, when the process of spending your money is quicker it's a lot less painful!

Today, Intuit also has QuickBooks, small business accounting software, and TurboTax, personal tax software. In fact, recently, I was at Office Max buying more printer ink and paper when I noticed a bin filled with Intuit software up at the check-out counter (given the time of year, this product placement isn't too surprising). I picked up a box and read the little label affixed to the outside. It read: #1 selling Quicken & TurboTax are #1 rated by Business Week, Smart Money, PC Magazine and Barron's. Now, I know we're all a little skittish about the tech industry, but this company isn't making computers, it's making and updating the software that we use on our computers. In addition, on Quicken.com, consumers and businesses can find insurance and mortgages, along with information and services to better invest and prepare taxes. I thought their numbers were worth a look. If any of you read the "Unscrambled Egg" I did on Intuit competitor H&R Block a few weeks ago, you'll remember I chose to use annual report numbers and I'm going to do so again. Why? Simple -- given the nature of their businesses, these companies are very cyclical. Comparing a non-tax season quarter to one including the months leading up to April 15th just won't provide an accurate picture.

My intuition about this being a good company appears to be validated by their financial statements as well. Boasting gross and net margins of 74% and 28%, respectively, I felt compelled to look further. Intuit has huge amounts of cash and a very low flow ratio of .56. I'm impressed. Management is definitely doing something right. And just who is their management these days? Co-founder Tom Proulx is no longer a part of the company, although Scott Cook is the current Chairman of the Executive Committee. Part of his company's success could be due to the fact that he is well known for being one of the first to apply techniques from consumer product marketing to software. This makes sense, since he came from Proctor & Gamble. These days, the hands-on leaders of the company are Bill Campbell and Steve Bennett. Following his stint as CEO from '94-'98, Campbell became Chairman of the Board. Under his leadership, Intuit grew from a 500 million dollar company to 2.5 billion, solidifying its position as a leader. His prior resume is vast, but what I love most is the fact that Campbell was the head football coach at Columbia University for six years!

The handsome Steve Bennett, following a twenty-three-year career all over the board at General Electric, jumped ship and came on as Intuit's CEO just last year. I have to speculate whether he left good 'ole GE when he realized he wasn't in the running to fill the illustrious Jack Welch's shoes. We'll have to wait and see whether GE's loss will be Intuit's gain. So far, the stock has been held down, along with the rest of the tech industry and overall market in general. Looking at their numbers, I wonder if it's primed to be picked up at these bargain basement prices? One thing is for sure though, Intuit and its products will always be relevant. We all have money, need money or are in the pursuit of money, and as much as I'd like to forget about Friday's appointment, we all pay taxes!