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Business and financial management solutions provider Intuit Inc. (INTU - Snapshot Report) recently announced that it has entered into an agreement to acquire Docstoc, Inc. Although the financial details of the deal were not divulged, the transaction is likely to close during the second quarter of fiscal 2014. The acquisition will provide improved solutions to manage sale and storage of documents and other needs of a small business.

Docstoc solutions are intended to aid small businesses in planning, licensing, marketing, human resources and financial management. Docstoc is a leading online destination that offers a wide range of business documents, videos, and other resources that meet the growing demands of a small business.

With the acquisition of Docstoc, Intuit will be able to build a more comprehensive platform for entrepreneurs as Docstoc’s capabilities are added to Intuit’s own platform handling payroll, inventory, sales and other needs of a small business.

Earlier this year, Intuit acquired Prestwick Services, LLC, a provider of payroll based billing and payment solutions. Using Prestwick’s technology, Intuit will be able to offer small businesses a solution to simplify the calculation of workers compensation insurance premiums.  Additionally, the synergies from the acquisition will help Intuit to gain traction in the small & medium business (SMB) segment.

We are positive about Intuit’s growing SMB exposure and believe that the Demandforce acquisition will continue to provide support to the segment. However, competition from leading payroll solution provider Paychex Inc. (PAYX - Snapshot Report) in the SMB arena, seasonality of Intuit’s tax business and the ongoing uncertainty in the economy concern us.

Currently, Intuit has a Zacks Rank #3 (Hold). Some better ranked stocks in the technology sector include SanDisk Corp. (SNDK - Analyst Report) with a Zacks Rank #1 (Strong Buy) and Arrow Electronics, Inc. (ARW - Analyst Report) with a Zacks Rank #2 (Buy)

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