Intuit Bulking Up, But Seasonality Prevails

By William Trent, CFA of Stock Market Beat

Last week Intuit (INTU) offered about $1.35 billion for online banking services provider Digital Insight (DGIN), based in Calabasas, Calif. The deal, expected to close in the first quarter of 2007, will bring Digital Insight’s operations into Intuit as a new financial institutions business unit.

This week they are upping it to an even $1.5 billion or so. Intuit to buy Electronic Clearing House for $142M: Financial News – Yahoo! Finance

Mountain View-based Intuit and Camarillo-based Electronic Clearing House Inc. (ECHO) said Intuit will pay $18.75 per share in cash in exchange for each share of Echo common stock. That’s about 15 percent above Echo’s closing price Thursday of $15.Echo provides end-to-end payment processing products, including check and bank card processing as well as check verification, collection, and guarantee services and automatic clearing house capabilities.

Whether or not Intuit makes a splash in online banking services, we continue to believe Intuit’s stock price will follow a seasonal pattern. If anything, the acquisitions will give traders an extra excuse to sell in the short term.

Disclosure: At the time of publication, author owns Intuit put options.

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: FedEx (FDX) put options; Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion’s Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Ceradyne (CRDN) put options; Lion’s Gate (LGF) call options; Dell (DELL) put options; Plantronics (PLT) put options

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