To clarify:
As a result of all the shares Checkfree repurchased late last summer, Intuit had until the end of this year to sell 325,000 shares of Checkfree which it holds, in order to keep it's ownership of Checkfree under 20% of Checkfree's total capitalization, which for accounting and tax purposes it is required to do.
Those shares were disposed of in the open market about a week ago.
Recent weakness or selling in the stock probably may possibly be attributed to Checkfree's management quietly informing various sell side analysts that their fiscal year 2000 earnings estimates were too high at 70 cents, and should be taken down. There were several downward earnings revisions as a result over the past several weeks. I believe that management is purposely keeping it's guidance very conservative, so that expectations don't get too high and any future surprises hopefully are favorable ones. In my opinion, the market has been adjusting to these lowered expectations on the part of some of the players in recent sessions. None of us who have lived this experience so far in recent months or years, could possibly expect the stock to move from 15 to 21 in four or five trading sessions without correcting along the way.
From my own standpoint, reported earnings are not as nearly as important as is gaining market share as quickly as possible, in order to retain the company's position of leadership in the face of what is becoming become very fierce and increasingly effective competition. If it has to come at the expense of near term earnings - so be it. I have never seen Pete Kight more confident about the way the business is going. But from the first day I met him, he was quick to point out that this industry was going to be be too big and too important for any one company to own it all. He would be quite happy to end up with 50% or 60%, and consider himself a big winner. In the meantime, we must expect to hear of wins by the competition.
I attended the BAI conference in Las Vegas this week and the confusion index is very high amongst the participants who are trying to make all this come together, especially when different vendors are telling different stories. One consultant who spoke in a very compelling manner, even went to far as to advise the attendees to forget Checkfree and Transpoint and have a few banks get together to form a utility to create Bill Payment and Bill Presentment themselves.
Oracle put out a White Paper explaining their entry into the business.They have been working with Checkfree for over a year now and make for a very powerful strategic partner whose sales force can help bring in many important customers with whom they have long established relationships. Oracle and Micrsoft are arch rivals.
First Union Bank of Charlotte, North Carolina will become the first large bank fully operational with state of the art bill presentment and payment. They have been migrated onto the Genesis platform; have Web access for their customers; and early next year should be delivering bills from A T & T and five or six other major billers.
I spent some time too with Chase Bank represntatives and saw an online demonstration of their system, also with on-line web capability. It was very impressive, but in recent months they have had some technical difficulties in getting their system to operate just the way they want it. However, they told me they expect to relaunch early in the first quarter of 1999 and hope to build rapidly to 1 million subscribers, from the current 350,000 suscriber level.
A number of banks are moving rapidly, others are dragging their feet.
Checkfree has told the industry that they can't wait for the banks to move at their own pace and therefore are moving ahead on their own to develop a portal capability which Checkfree may offer directly to consumers themselves; but we will have to wait until sometime early next year for more information on the specifics, while Checkfree develops the necessary software to make this happen.
As investors, we become impatient,especially when the stock market is so volatile, but all these things take time, and those who have a vision have learned they will have to forgo instant gratification in the hopes of greater long term rewards.
I think a lot of the pieces will have come into place by early summer, and sometime perhaps late in the second half we, and the rest of the world, should get a pretty good indication of how all this will shake out.
One thing everyone seems to agree on. We are onto someting that can be really big!
Best wishes during this Holiday season to all faithful Checkfree holders and contributors to this thread. |
