updated 3/9/2006 7:49:27 PM ET 2006-03-10T00:49:27

Intuit Inc. predicted its quarterly profit will be better than expected, primarily because more people are buying the online version of its market-leading tax preparation software. The news lifted the company’s stock price by more than 6 percent.

The Mountain View, Calif.-based maker of TurboTax said Thursday its earnings for the three months ending in April will range from $1.64 to $1.68 per share, excluding certain expenses. The projection represents an increase of 2 cents per share from a management forecast provided three weeks ago.

The average earnings estimate among analysts surveyed by Thomson Financial is $1.66 per share.

Intuit also increased its previous revenue estimates by $20 million, raising the projected range to $880 to $900 million, an 8 percent increase from the same time last year.

Intuit’s recent growth is being driven by the Internet.

Through March 4, Intuit had sold 3.28 million copies of TurboTax’s online program, a 58 percent increase from last year. Sales of TurboTax software installed on computers have been stagnant, rising by just 17,000 copies from last year to 5.73 million units.

Intuit appears to be benefiting from its participation in a government-sponsored initiative that last year offered all taxpayers a chance to file their returns online for free if they were willing to use a basic program. The rules for free filing have been tightened this year to limit eligibility to lower-income taxpayers.

A significant number of people who filed for free last year appear to be staying on the Internet as they pay for tax preparation software in 2006, said ThinkEquity Partners analyst Glenn Greene.

Intuit said it had distributed 831,000 copies of its free tax program through March 4, a 40 percent decrease from last year.

Greene believes another factor may be driving Internet sales of tax preparation software — more people in their late teens and early 20s are now working full-time and, having grown up with the Web, feel more comfortable filing their returns online than older generations.

As the longtime market leader, TurboTax has built a strong brand that people tend to remember when they pick a tax software program for the first time. H&R Block Inc., which has been battling with Intuit over the claims made in a recent TurboTax ad campaign, makes the second most popular program, TaxCut.

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