Hey Paul,
I don't see that these two companies, Checkfree and Cybercash, are in the same league or even really the same business at present. Their markets are related in some fashion but to see Cybercash as a true competitor for Checkfree at this time it just isn't possible.
Checkfree has, by all accounts, somewhere in the area of 1Million active subscribers to their services already, each paying a monthly fee, and a potential of about 40Million customers already because of it's signing on-board of almost all of the major banks and its strategic alliances and aquisitions. Assuming each of the companies ~1Mil customers are paying $5.95 a month, probably less than that on average but lets just suppose for a minute, that totals 5.95M/month revenue. They also provide a wide range of services to their customers which are primarily focused on bank account communications and bill payments from those bank accounts. Checkfree is definitely a Macro player, is the biggest player in its market, has been for quite some time, and is grabbing more market share as quickly as possible.
Cybercash has, from the news announcement you posted, 2500 corporate, mostly small corporations probably, subscribers at present available to at least 7M customers of AOL but probably many more. At $100/month for their corporate customers this totals 250K/month and some percentage of this invariably goes to AOL (one of the big online cash sinks but that's another whole discussion); this is only 1/24th of Checkfree's cash flow. Cybercash is also solely in the business of providing secure internet credit-card transactions at present. Cybercash is still a Micro player, in a moderately different market, with many competitors, in comparison to Checkfree.
Sure, if Cybercash is able to exponentially grow its market faster than Checkfree's exponentially growing market (nobody doubts that these market areas will be exploding over the next few years) and expand into the same areas as Checkfree it could start to be a factor as some type of competition for Checkfree but Cybercash has a whole lot of catching up to do. More likely, if Cybercash becomes the dominant internet secure credit card transaction company, which is far from certain at present, then Checkfree may attempt to aquire Cybercash.
But, despite all this discussion of why the news release shouldn't of had any effect upon Checkfree's stock price, as we all know all too well, the market can be influenced in all sorts of ways by news which will have no real effect upon the long term viabilitlity of the company the news is about. The recent fluctuations down, however, are not significant enough to mean anything much. The companies stock price has been on a downward track for quite some time now and although I'm looking for a turnaround sometime in the next 6 months, especially if analysts see how well this company is really doing despite its negative earnings, it may head a bit lower still before it turns.
Obviously I have a long term very positive position on Checkfree but it may take some time to realize the full potential of Checkfree's position in terms of stock price. There are plenty of other shorter term money makers out there which I find much more interesting, IOMEGA being my current pick for a big move ... upwards in the beginning of next year, but don't miss the boat on this one when it starts to move up.
Regards,
sMiles ~8-) |
