Opts Out of Agreement With Intuit (Breakfast News) October 8, 1999


Friday, October 8, 1999

"Live together like brothers and do business like strangers."
-- Arabic proverb Opts Out of Agreement With Intuit

By Richard McCaffery (TMF Gibson)

Online mortgage services company (Nasdaq: MDCM) has canceled one of its two agreements with software maker Intuit (Nasdaq: INTU) to pursue opportunities with other online venders. officials said the number of loans Intuit's online mortgage service, QuickenMortage, had driven to had been declining and that the agreement prevented the company from working with other companies in the industry.

The cancellation comes in the wake of Intuit's announcement yesterday of an agreement to purchase Rock Financial for $370 million in stock to add to its online mortgage services capabilities. The deal is aimed at expanding QuickenMortgage, which allows customers to shop, compare, and apply for mortgages online, but doesn't work with them throughout the loan process. Rock Financials' will allow QuickenMortgage customers to work directly with a lending team as the loan is prepared.

In addition, Bingham Farms, Michigan-based Rock Financial is expanding its Web call center capabilities by building a new 110,000-square-foot headquarters in Livonia, Michigan. QuickenMortgage originated more than $1.2 billion in loans fiscal 1999. Together, the companies have originated almost $3.5 billion in mortgage loans over the last year. The added heft is expected to benefit consumers and Intuit's institutional loan partners.

Intuit pushed hard to increase its Internet and e-commerce business over the last fiscal year, which ended July 31. Internet-related revenue reached $125 million in fiscal 1999, or 15% of total revenue, which was more than twice the level achieved in fiscal 1998. The online mortgage industry not only represents a growing source of revenue for Intuit but could help smooth its quarterly earnings fluctuations, which ride the tax-season roller coaster.

In a related deal, Intuit agreed to acquire Title Source Inc. -- which offers title insurance and escrow services to real estate agents, corporations, and homeowners -- for $6 million in stock. It's all part of Intuit's plan to offer one-stop mortgage shopping for customers.

News to Go

Document printing and products company Xerox (NYSE: XRX) warned investors it will miss third quarter estimates as a result of competitive pressure, an unfavorable product mix, and a sales force realignment, which resulted in less-than-expected revenue in the United States and Europe.

Insurance and reinsurance provider Ace Ltd. (NYSE: ACL) expects to take a $35 million charge in Q3 as a result of earthquakes in Taiwan, Turkey, and Mexico, a tornado in Hong Kong, and Hurricane Floyd in the U.S.

Retail coffee house operator Starbucks (Nasdaq: SBUX) reported that company-operated comparable store sales grew 8% for the month of September, compared to the year-ago period.

Telecommunications equipment provider Datum (Nasdaq: DATM) warned investors it expects to report higher losses than anticipated (including acquisition-related charges) in the third quarter as a result of slow sales. The company expects revenue of $25 million and a loss between $0.11 and $0.14 per share, compared to the $0.06 loss analysts were expecting.

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