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UNDERSTANDING INTUIT'S NEED TO GROW

This week’s annual meeting of Intuit shareholders brought one question from the attendees that may provide some insights into why Relational Advisors is interested in Intuit. And that was regarding why had Intuit’s stock price been essentially flat for 10 years?

That question followed the election of directors, which included Relational’s principal, David Batchelder. To recap, Relational bought just under 5 percent of Intuit’s stock earlier this year. It proposed three members to the board of directors and Intuit avoided a proxy fight when it agreed to instead put Batchelder on when former CEO Stephen Bennett conveniently resigned. Relational has a reputation for improving corporate governance and also for getting more out of under-performing companies. Since Brad Smith took over the job as CEO in January 2008, and Bennett had the job for eight years, I’d think Relational would give him a little more slack than if he had been entrenched for ages. But it also explains why Smith has been hitting the same message at investor conferences since September, a message he also repeated at the shareholder meeting. And that is how much revenue Intuit can get if it can sell more payroll to QuickBooks users, decrease the 20 percent of QuickBooks purchasers who never use the product after they buy it, and the potential of Mint.com. Smith’s said Wall Street isn’t giving Intuit a better share price because it doesn’t see the potential for sustained high revenue growth. It’s not coming out of ProSeries and Lacerte and how much growth can it by selling new copies of QuickBooks? So selling more to the installed base looks like the easiest way of getting there. For the record, the 52-week range for this year is $21.07 to $31.29 with yesterday's close at $30.88. Ten years ago today, the close was $26.44 per share, adjusted for splits,

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