Business and financial management solutions provider
) is undertaking massive reorganization initiatives. After
realigning some of its business operations in May, Intuit has now
announced the divestiture of the Intuit Financial Services (IFS)
business. It also plans to offload the Healthcare business and
further realign its Accounting business. The reorganizations are
part of Intuit's decision to focus more on core businesses i.e.
tax preparation service and small business solutions.
Intuit will sell the IFS unit to a private equity investment
firm, Thoma Bravo for a cash consideration of $1.025 billion. The
IFS unit provides digital (online and mobile) banking solutions
to financial institutions. The unit, which was formed after
acquiring Digital Insight for $1.35 billion in 2007, failed to
match company expectations of performing in line with the core
The divestiture will be completed within a few months. Post
completion, Intuit expects the cash proceeds to fund upcoming
Earlier, on May 20, 2013, Intuit announced realignment of its
business operations into six go-to-market divisions that will
report directly to the chief executive officer. The new divisions
are as follows: (1) Small Business Financial Solutions
(combination of QuickBooks, Payment Solutions, and the Intuit
Partner Platform), (2) Small Business Management Solutions
(comprising Employee Management Solutions and Demandforce), (3)
Consumer Tax, (4) Consumer Ecosystem (focused on solving
important consumer problems with solutions such as Quicken and
Mint.com), (5) Accounting Professionals, and (6) Financial
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As per the current reorganization plan, the Financial Services
segment will be dissolved while the Accounting Professional
segment will be further subdivided into two groups, namely
Accountant and Advisor Group and ProTax.
Intuit currently generates less than 5% of its total revenue
outside the U.S. The recent announcement complements its plan to
focus on expanding its international presence. The realignment
will be effective from Aug 1, 2013.
We believe that increased focus on SMB and Tax businesses will
allow Intuit to boost its organic growth. But stiff competition
from leading payroll solution provider
) in the SMB arena, seasonality of Intuit's tax business and the
ongoing uncertainty in the economy concern us.
Currently, Intuit has a Zacks Rank #3 (Hold). Investors can also
have a look at
), which have Zacks Rank #1 (Strong Buy) and are worth