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October 8, 1998

INTUIT SPARED COMBAT WITH MICROSOFT, FOR NOW

By CBR Staff Writer

Things are looking up for Intuit Inc, according to analysts at Credit Suisse First Boston, who say they have confirmed with retail sources that Microsoft has shelved its plans to offer a retail tax preparation software product this year. CSFB hears that quality issues were behind the abandonment of the offering. Microsoft may, however compete directly with intuit by posting an online tax product this year aimed at a small segment of the market for tax software. CSFB had actually lowered its outlook for revenue growth and operating margins at Intuit, based on the assumption that Microsoft was going to be a direct competitor. The bank is being cautious, though, about revising estimates until it knows what Microsoft will do next. For now, it sees the development clearly as good news for Intuit’s P&L and continues to rate the stock as a buy with a 12-month target of $62. It figures that the weight of an impending Microsoft announcement had stunted Intuit’s shares lately and that now investors should be more attracted to the stock, as any on-line initiative by Microsoft would be relatively toothless compared to a retail launch because the market is much smaller and Intuit already offers an on-line tax product free of charge. Intuit shares fell $3 anyway to close at $37.25 Thursday.

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