CheckFree Holdings Corp. (CKFR), the next Dell, Intel? Message Board

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Technology Stocks : CheckFree Holdings Corp. (CKFR), the next Dell, Intel?

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To: AugustWest who wrote (6323)	6/15/1999 2:57:00 PM
From: Charlie Smith	Read Replies (1) of 20297

August: I took that as a 6 month free trial. Yep. So after 6 months, would the expected new subscribers be "mature"? My guess is yes again. Key is how many new trials does CKFR expect? How many new subscribers do you think will sign up in the next three months to have an impact on FY00 earnings? We can back into CKFR's guess on this number from the .40 loss estimate. Assuming zero new revenue from new subs over the FY00, a swing to a loss of this size from current profit estimates implies a net incremental pre-tax cost increase of $54 million ($32mm - $54mm = $-22mm). If the cost of each new trial is one year's revenue ($48/yr/sub), then they expect 2.25 million new subs ((54/48)2) by the end* of FY00 (1.13mm average for the year). Another way of looking at it is that the new promotional spending will cause every new sub brought on in FY00 to be a pretax loser to CKFR to the tune of $24. Because there will obviously be incremental revenue from the new subs, this $24 number is too high, but IMO it is a decent starting point for determining the profit function for FY00. Charlie

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