Soft TurboTax Sales Sink Intuit

Bill Snyder

03/22/07 - 02:20 PM EDT

Shares of Intuit(INTU Quote - Cramer on INTU - Stock Picks) are taking a beating after the maker of tax-preparation software announced disappointing sales figures for TurboTax.

In recent trading Thursday, the stock was off $2.50 a share, or 8.3%, to $27.50 on heavy volume.

With about one-third of the tax season left, sales of Intuit's flagship TurboTax program are up just 1% year over year.

However, the company said it is sticking by its earlier guidance for the quarter and said it expects total TurboTax unit sales to grow by 3% to 5% when the season ends.

The growth slump was apparently caused by tough comparisons to last year's strong showing, price increases and competition from HR Block(HRB Quote - Cramer on HRB - Stock Picks) and privately held TaxAct, said CIBC analyst Scott Schneeberger, whose firm does not have an investment banking relationship with Intuit.

Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) competes with Intuit's personal finance products such as Quicken.

Although the analyst expects the company to deliver double-digit revenue growth during the tax season, weak volume makes upside to the company's guidance "unlikely," he wrote in a note to clients.