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Intuit Inc. (Nasdaq:INTU) and Digital Insight Corp. (Nasdaq:DGIN) are getting married and the hope is Intuit becomes bigger and better. Combinations of this nature usually become problematic with cultural integration and the never ending quest for true synergy. The press release indicates “The acquisition will combine Intuit's culture of customer-driven innovation and leading brands with Digital Insight's best-in-class distribution and application service provider model.” This a very high level marketing perspective is almost simplistic. One wonders how deep the thinking is about the integration process.

The press release also indicates that Digital’s operations in California and Georgia will remain unchanged. Management was suspiciously quiet about any plans for work force reductions and any termination costs that may occur. Just what are the troops being told?

Digital had a Q3 loss due to a huge non recurring problem (read impairment charge on goodwill). 06 earnings will probably be a loss. 05 earnings were approximately $26.5 million. Intuit Management believes “The transaction is expected to be dilutive to Intuit by two to three cents per share on a non GAAP basis in its current fiscal year and slightly accretive on a non GAAP basis in fiscal 2008.”

Digital still has approximately $100 million in good will. Intuit clocks in with approximately $500 million of good will. Intuits press release quotes Steven Bennett president and CEO as saying “The combination of two industry leaders will put Intuit in an excellent position to bring a new generation of online banking solutions to market in a way that will redefine the way small businesses and consumers manage their financial lives," The acquisition will be financed by borrowing $1.35 Billion. Are they still standing behind the dilutive/accretive calculation? The new products and improvements will be financed by hmm cash flow I guess.

I am not connecting the dots on this one. Get ready some more write downs are coming and negative news has to come out of this one.

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