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Sometimes it pays to not be too ambitious.



(INTU) - Get Intuit Inc. Report

. The Mountain View, Calif.-based maker of financial software for consumers and small businesses was poised in the mid-1990s to be a revolutionary force in the electronic banking world.

Back then, many believed that with the Internet about to change the way people managed their money, Intuit was uniquely positioned to become the standard interface for millions of consumers, investors and business owners.

It got to the point where


(MSFT) - Get Microsoft Corporation Report

was jonesing to buy Intuit -- Bill Gates reportedly said at a meeting, "Get me into that, and ... we'll make so much money."

Things turned out differently. The Internet did change the way people handle their finances. Gates made his money, but without any help from Intuit.

And Intuit never became the threat to old-fashioned banking that many expected it to be. Instead, it trod the straight and narrow, doing what it did best, which was make financial software programs.

If that sounds a little gutless, know that Intuit investors haven't complained too much. While other Internet companies that set up big, hairy goals and put everything into pursuing them have seen their stocks rise, fall, rise and fall again, Intuit has for years steadily pushed higher.

True, Intuit did see volatility in early 2000, like nearly every Silicon Valley stock, but it recovered more quickly. And comparing its stock performance over the past five years with that of its onetime wooer, Microsoft, gives you the impression this is a company that has chosen a modest task for itself, and chosen to perform it well.

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The last year seemed to go down well with shareholders. In the financial year that ended July 31, Intuit saw revenue rise 15% to $2.3 billion, and non-GAAP operating income rose even faster, up 18% to $654 million. That helped expand Intuit's operating margin to 28% from 27%.

There were numbers in the annual finances that investors might not have liked as much, though. On a GAAP basis, operating income rose only 7%, and the margin dropped to 24% from 26%, due to the expensing of employee stock options.

Investors, of course, don't like to see labor costs -- whether through wages, salaries or options -- eat into margins, and the specter of options is one that still hangs over Intuit, despite its announcement earlier this month that an internal investigation into its past options-granting practices uncovered "no evidence of fraud or intentional wrongdoing."


Securities and Exchange Commission

still has to weigh in on that matter, however. In the company's earnings call last week, Intuit President Stephen Bennett said he has a meeting scheduled with SEC officials at an undisclosed date to present the findings of its internal review.

Intuit's stock is down 2.5% since it announced the results of that review. And the stakes here are higher for Intuit. If you make iPods, you might be forgiven for a sloppy audit. If you make tax software, there's no room for error.

"The uncertain thing at this point for us is whether they

the SEC will react or not," Bennett said in the call. "If they have anything they say, like

the SEC review is closed, we will communicate it. If not, sometimes they just do not close the loop, so we will have to wait and see."

As long as that cloud hangs over Intuit, it may provide a chance to get in on a company with a strong track record of introducing new products, making intelligent acquisitions and marketing in a way that reaches new customers while deepening relationships with older ones.

Intuit also has managed to pull off the difficult trick of posting a loss in two out of every four quarters. This is partly because its sales are very lumpy, while production costs remain steady, but it also speaks to the management's ability to not only beat the Street's expectations but to control its guidance in such a way that investors and analysts remain believers in the company.

In fact, the sense among many analysts is that Intuit is being demure about its revenue projections. "Intuit is guiding to revenue growth of 8% to 10% in fiscal 2007," said Needham analyst Charlie Wolf in a post-earnings report. "But if history is any guide, the company is more than likely to exceed its guidance." Needham has no underwriting relationship with Intuit.

And if stock-price history is any guide, Intuit is likely to keep leaving Microsoft in the dust.