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Technology Stocks : CheckFree Holdings Corp. (CKFR), the next Dell, Intel?
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To: TLindt who wrote (1937)1/27/1999 12:15:00 PM
From: p friend  Read Replies (1) of 20297
 
Reading between the lines, it seems that the best case is going to yield further delays in earnings and further downward revisions. This first big portal deal will take a few million $ of up front spending to speed up the scale up. That is, beef up IT capacity and customer support capacity. This needs to happen up front so we get nothing but cost this fiscal year. The difficult thing that they can't predict (thank god no more predicting) is how big it will be when the portal rolls it out. If the response is good it will be a huge bump in required capacity for Checkfree. The money has to be spent up front to reduce the risk of letting consumers down when they sign up. We know how fast internet speed is when it comes to adoption.

If the response is good, the capacity will be needed immediately. However, the most likely scenario is that one or more other portals will sign up this quarter or next. Alan indicated that this would not cause further reductions in earnings estimates this fiscal year. However, depending on how fast these portals roll out the service, more up front spending for speed up & scale up will probably be required. So we get more and more good news about adoptions by billers, portals, consumers (probably not much left from the banks) and the result is more and more required up front spending and earnings further away.

In the Internet stock market, this probably will not be bad news for share price. The bad news would be if the portal roll out doesn't suck up the extra capacity quickly.
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