) to hold from buy.
Analyst Mark Rowen says lower than expected seasonal software sales were due to weak sales in tax-related software as Intuit is gaining market share on one of Digital River's largest clients, H&R Block. He believes the problems likely run deeper as management also cut guidance for the rest of the year.
Rowen says e-business services should be flat to slightly down sequentially, marking the third straight quarter without growth. He cut his $0.42 2002 EPS estimate to $0.24, and trimmed the $0.50 (pro forma) 2003 estimate to $0.38. He also cut his $25 target to $12.