An analyst who tracks Intuit (INTU) for CS First Boston said Thursday that Microsoft (MSFT) has abandoned its behind-closed-doors plans to sell off-the-shelf tax-preparation software this year.That removes a "dark cloud" hanging over Intuit shares, said the analyst, Lise Buyer. Buyer projects that the stock, which closed down 3 at 37 1/4 on Thursday, will hit 62 within a year.
A spokeswoman for Redmond, Wash.-based Microsoft, the world's largest software company, declined to comment on the report.
Bob Meighan, vice president of Intuit's personal tax group, said from his headquarters in Mountain View, Calif., he'd heard talk of the changed plans but he wouldn't comment further.
A software industry source, however, said that Microsoft recently sent out terse letters to major retailers telling them "not to save shelf space" for the upcoming season's tax product, reportedly called Tax Saver. Stores sell tax-preparation software from November to April.
With its TurboTax product, Intuit controls about 70 percent of the retail market. The remaining share is held by of Kiplinger TaxCut from Block Financial, a subsidiary of H & R. Block (HRB).
Microsoft and Intuit have been long-time rivals since Bill Gates' company tried to buy the much smaller company a few years ago. After that effort was opposed by federal antitrust regulators, Microsoft launched its Money program to compete with Intuit's flagship Quicken product.
Quicken has maintained about 80 percent of the market for personal finance software "despite Microsoft basically giving their product away," said CS First Boston's Buyer, who is bullish on Intuit.
Microsoft is looking to build up its tax offering to complete its personal finance product line. As it stands now, people who use Microsoft Money and want to prepare their taxes electronically have to choose between TurboTax and TaxCut.
That leaves a big hole in Microsoft's product line - one that the aggressive software giant is anxiouto close.
Written By Brenon Daly