Intuit ( INTU) reported a 5% decline in early sales of its flagship TurboTax product Thursday, but it noted that the drop may reflect growing Web sales.

Because Intuit just launched its TurboTax for the Web product Jan. 6, the latest figures do not include those sales.

TurboTax retail sales, meanwhile, suffered a 3% drop through Jan. 8 compared with the same period a year ago, falling to 845,000 units. Intuit reported an even steeper 7% decline in direct TurboTax sales, to 851,000 units. Combining those two channels, TurboTax unit sales fell 5% to 1.7 million.

Brad Smith, Intuit's senior vice president of consumer tax, said in a statement that the early results are consistent with the company's expectations. "This year, we expect to see an even greater shift from desktop to Web sales, which tend to occur later in the season," he said.

But Banc of America Securities analyst Hari Srinivasan called that start to the tax season -- when Intuit records the bulk of its sales each year -- "a little disappointing." Still, he noted that the numbers reflect new seasonality in the TurboTax business, with the popularity of electronic filing leading to later purchases of tax software.

Srinivasan maintained his neutral rating on Intuit, noting that he recommends investors wait on the sidelines until the company shows more success from new initiatives to spur growth. His firm has done investment banking with Intuit.

Analysts have been expressing concern about a maturing of Intuit's business, which also includes accounting products such as QuickBooks for small businesses.

Jefferies analyst Craig Peckham, for instance, wrote earlier this week that he believes pricing pressure due to competition with H&R Block ( HRB) will slow Intuit's tax revenue growth this year to 5% to 10%. He is forecasting overall sales growth for Intuit of 7.8% in fiscal 2005, compared with 13% in fiscal 2004.

Peckham noted that while H&R block raised its prices by 25% to 40% this year, Intuit's Web product prices range from either unchanged to up $5 from last year. (Peckham has a hold on Intuit, and his firm hasn't done banking with Intuit.)

Intuit's stock, meanwhile, has sunk 17.7% in the past year, compared with a 12.8% drop in H&R Block stock, a 5.4% gain registered by the S&P 500 and a 0.9% decline in the Nasdaq Composite. Shares of Intuit lost 89 cents, or 2.2%, to $39.46 in recent trading.

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