FUNDWARE FOR SALE.

Finding little profit in not-for-profit software, Intuit is putting its Intuit Public Sector Solutions (Fundware) on the block after three years of no sales growth. The other verticals that it acquired in its vertical buying spree, Master Builder, Eclipse, and MRI, are doing just fine, according to the company. IPSS had $12.8 million in sales for the year ended, July 31 2004, and $12.7 million for FY 2003. For 2004, the vertical group had $109.1 million in sales, up 15 percent for the year, and operating income of $4 million, a $12 million improvement from losses in FY 2003. Without Fundware's drag, the verticals had a 17 percent increase in revenue and $5 million in operating income. IPSS lost $1.1 million in 2003 and $600,000 for FY 2004, but did turn a $300,000 operating profit in Q4. Intuit paid $23 million in stock and $4 million in cash for Fundware in the spring of 2002. Intuit expected Fundware revenue to hit $15 million to $20 million a year when it was acquired. A check of the Intuit Web site list of resellers showed what appeared to be fewer than 30 on a quick look. The Fundware folks had announced plans to hire someone this summer to recruit more VARs.

Consulting Insights August 20, 2004