Hi Charlie,
It's sure been a euphoric week for Checkfree shareholders. I suppose a combination of factors have contributed to this week's rise, including mailing of the annual report, news announcements pertaining to the business, technical breakout of the stock, buying by large investors, and upgrades by several prominent brokerage firms who have finally raised their one year price targets for the stock Also, management in recent weeks have been out to see various institutional investors, and also are planning a one day seminar at the company headquarters on November 6th for professional investors. I guess you could also say that the selling in the low 20's finally dried up..
From a fundamental standpoint, events are falling into place very nicely for Checkfree:
1. Visa International has been taken over by Integrion and First Union, a major Visa backer has gone on the Integrion Board.
2. CitiBank, one of the wild cards until now, has joined Integrion and also has taken a seat on their Board. Citibank is one of the very few banks which has it's own Bill Payment capability, but I am told they lose money doing it. One can speculate that eventually they too will turn to Checkafree for Bill Payment.
3. Intuit and Integrion have announced an agreement whereby Intuit will become a provider of online banking software to Integrion. But Intuit, who owns 20% of Checkfree stock) has an agreement with Checkfree that provides for Intuit to use Checkfree for all bill payment arrangements it enters into until the end of 1998. The only thing we haven't seen yet is an agreement between Integrion and Checkfree for Checkfree to become the supplier of choice for Integrion's Bill Payment service..
So the battle lines are being drawn with Micrsoft/First Data on one side and Integrion ( IBM and virtually the entire banking industry) on the other. This Fall most of the major banks will be out there promoting on line banking to their cutomers, garnering added revenues for Checkfree. I wouldn't mind having the banking industry as my sales force.
Then there is the whole question of Bill Presentment and the business side of this rapidly emeging electronic commerce industry. As large as consumer home banking promises to be, industry observers believe that Business users of this new service will be even greater.
Here too, Checkfree has a commanding lead, and the annoucement by Chase Bank that they will be offering bill payment and bill presentment services using Checkfree software confirms that and was certainly not lost on Wall Street. Now all we need is a couple more banks to join Chase in signing up with Checkfree for bill presentment and the others will probably fall in line too..
As the optimist was heard to remark, "With all that manure, there must be a pony under there somewhere ?"
I do believe, not withstanding the stock's already high market valuation, that Checkfree could be a big winner in time from here, and
that one the the biggest risks to investors, including myself, is that we will be tempted to sell too soon because of a too rapid runups like last week's.
Regards,
Bob Gintel |
