What's Happening: Shares of Intuit slumped on Friday after the company reported its fiscal fourth quarter results. The results were mixed, with Intuit falling short of analyst estimates for revenue, but the real news is that the company announced that it plans to divest various businesses as it transforms itself into a cloud-based company. At 10:45 AM Friday morning, the stock was down about 13%.
Why It's Happening: Intuit reported quarterly revenue of $696 million, up 7% year-over-year but quite a bit short of the average analyst estimate of $739 million. Profitability improved, with the company posting a $0.05 GAAP EPS, up from a $0.10 per-share loss during the same period last year.
Intuit announced that it will be divesting Demandforce, a cloud marketing product, QuickBase, a collaboration solution, and Quicken, the personal finance software. These moves will reduce fiscal 2016 revenue by roughly $250 million and non-GAAP EPS by $0.10.
Intuit's mission statement is to be the operating system behind small business success, and to do the nations' taxes in the U.S. and Canada. These divestitures will leave TurboTax and QuickBooks as Intuit's main products, and the online versions of both of these products are growing fast. In fiscal 2015, U.S. TurboTax Online units rose 11%, while QuickBooks Online subscribers surged 57%.
It's hard to say whether it was the disappointing revenue or the news of the divestitures that sent the stock tumbling. The transition to a more focused, cloud-based company will take some time to play out, and how much Intuit receives for the businesses that it's divesting is also a big unknown at this point. At the moment, investors aren't thrilled by the news.
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The article Why Shares of Intuit Inc. Slumped on Friday originally appeared on Fool.com.
Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Intuit. The Motley Fool owns shares of Intuit. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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