Brian,
It's great to have you back and posting again. It seems to me that the pieces of the jigsaw puzzle may soon come together and I wonder what insights you might have to share ? It can be very puzzling for investors to sort out.
1. The major players are lining up, partnering, venturing, and establishing relationships. What do they mean and where will they end up?
a. OFX..An announced joint venture between Micrsoft, Intuit, and Checkfree to establish a software protocol to allow all computers to talk to each other in business commerce - bill presentment and bill payment. Checkfree has the backend processing portion, and itself has announced an E-Bill program with such companies as Capstead Mortgage, Florida Power & Light, and Southern Bell who have already signed up. Yet, we hear that Microsoft and First Data are about to announce their own electronic bill presentment joint venture. If so, who will or even could, do the bill payment processing for them. In any event, it will probably be two years before anyone will get any significant revenue from this, but it is potentially a vast market and surely must validate Checkfree's early entry decision into that business.
b. Integrion is a joint venture between IBM and 16 major banks, to develop a way for it's members to get into consumer home banking. Of the 16 Integrion banks, 11 have already independently signed on as Checkfree customers. The industry is moving ahead rapidly and Integrion, which represents the largest competitive threat to Checkfree at the moment, has no backend processing capable of being brought to market over the near term.
c. Will Integrion strike an alliance with Checkfree to handle Integrion's backend processing, as is currently being rumored, and thus allow Integrion to move more rapidly to get into the business before events pass them by? Wouldn't that be enormously important to Checkfree if it happened, as it would allow a single processor to service virtually the entire banking industry for bill payment? If so, what happens to Citibank, the one bank with it's own backend processing capability which so far has not sacrificed its own investment by abandoning it's internal organization and signing up with Checkfree. By itself, Citibank is not efficient enough to profitably handle the traffic, and I imagine all the other banks would be very reluctant to hand their customer lists over to Citibank , or any other bank, to process. And so you have had this impass. Meanwhile, Bank of America, which also has back-end bill payment capability, has signed on with Checkfree for all it's operations outside the State of California, but does it's own processing inside California. How will that bank's hybred situation eventually fit into the picture? As an extraneous tidbit of information, Key Bank is one of the 5 Integrion banks which has not yet signed up with Checkfree. Yet my Vickers screen shows that Key Corp. just purchased 1.6 million shares of Checkfree stock in the March quarter.
d. There is Visa, who I am led to believe, is seeking a way to exit the business. All they really have to sell, I think, is a few signed up customers to hand over to some one to take over.
e. Then there is EDS, and others like Data Financial, who probably are trying to define their own roles in what promises to be a very interesting, if not exciting, industry.
2. These, I think, are some of the important, but difficult isses and stumbling blocks that need to be addressed before the industry can go foward in a rational way. I have a feeling that perhaps some will come sooner, rather than later. In any event, Checkfree is establishing electronic links with most of the major banks. What a uniqely strong position for a company to be in!
3. What could blow it? Any thoughts? |
