Updated from May 19

Intuit

(INTU) - Get Report

beat Wall Street's earnings expectations by 4 cents and posted record third-quarter revenue, the tax software giant said after the closing bell Wednesday.

However, the company's guidance for the fourth quarter was light on revenue and included a bigger-than-expected loss, as management conceded that growth in the company's core areas is slowing and predicted that top-line expansion in 2005 will be less than 10%.

In recent trading, shares of Intuit were down $3.75, or 8.8%, to $39.02.

Revenue in the April quarter -- traditionally the company's strongest since it includes tax season -- was a record $713 million, up 12% year over year, and about 1% above the $706 million consensus of analysts polled by Thomson First Call.

Pro forma net income increased by 8% year over year to $238.7 million, or $1.20 a share; analysts were expecting a profit of $1.16 a share. On a generally accepted accounting principles basis, net income was $264 million, or $1.33 per diluted share, down from $1.40 per share a year ago. However, last year's bottom line included a one-time gain of 34 cents a share from the sale of Intuit's operations in Japan.

Revenue from the company's flagship, TurboTax, was $344.7 million, an increase of 10%.

Professional accounting revenue, however, grew just 3% year over year (some analysts had expected 13%) as competitors aggressively took share by cutting prices.

Looking forward to the July, or fourth, quarter the company told investors to expect a pro forma loss of 6 cents to 10 cents a diluted share, compared to analysts' expectation of a 6-cent loss. Revenue will range from $258 million to $278 million, the company said; Wall Street was expecting $283.48 million.

Although the forecast of an oversized loss in the July quarter was somewhat disappointing, it was less significant than it would be in other companies since Intuit generally losses money in the July quarter. Revenue falls over sharply after tax season, but expenses don't.

However, the company's prediction that it will grow in "high single digits" during fiscal 2005 was damaging. Moreover, management was vague about the future during a conference call late Wednesday afternoon, repeatedly declining to give details about its plan to refresh key businesses and telling analysts to wait until the August earnings call for details.

"Slowing growth at INTU has been apparent for several quarters, yet these results will again punish the stock. The key questions in our opinion have not changed: Where does growth stabilize, and what is that worth from a

valuation perspective?" J.P. Morgan Securities analyst Adam Holt said in a note to clients. (J.P. Morgan has provided noninvestment banking services to Intuit.)

The company also said it plans to buy back up to $500 million of its shares in a stock repurchase program, its board's fourth such authorization.

"As of April 30, 2004, Intuit had $99 million remaining in its third repurchase program, which it will exhaust prior to making repurchases under the fourth program," the company said in a statement.