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Technology Stocks : CheckFree Holdings Corp. (CKFR), the next Dell, Intel? -- Ignore unavailable to you. Want to Upgrade?

To: Ron S who wrote (6885)	6/24/1999 8:22:00 AM
From: jerryriti	Respond to of 20297

CheckFree Moves to Calm Fears of Big Banks' Plans By NICK WINGFIELD THE WALL STREET JOURNAL INTERACTIVE EDITION-June 24 SAN FRANCISCO -- CheckFree Holdings executives swung into damage control mode Wednesday after its shares plunged because of a plan by three of its biggest customers to form a competing Internet bill-delivery company. Shares of CheckFree, Atlanta, fell 8 15/16, or 24%, to close at 28 3/4 on volume of 16.3 million shares on the Nasdaq Stock Market, up from average daily volume of 781,000. Meanwhile, the Nasdaq Composite Index rose 17.87 to 2598.13 and Morgan Stanley's high-tech 35 index added 9.33 to 1116.88. The Dow Jones Internet Index added 4.77 to 231.84. Three banks -- Chase Manhattan, First Union and Wells Fargo -- on Wednesday announced plans to create the Exchange, a company that will act as a high-tech post office for electronic bills, routing them between billers and consumers (see article). The banks hope to kick start online bill presentment and payment, which has been slow to catch on with consumers because of a lack of participation from billers. The Exchange will also try to resolve the incompatibilities between bank and biller payment technologies, a factor that stymied support from billers in the past. It's unclear how serious a threat the effort represents for CheckFree in the near term. CheckFree is known for handling bill payment between a consumer's bank and a biller, such as a utility or phone company. In many instances, its services are decidedly low-tech: After consumers write their checks at a bank Web site, CheckFree then prints out a paper check and mails it to the biller. The three banks involved with Exchange, which together represent about 20% of CheckFree's total revenue, pledged Wednesday to continue using the company's services. The news came a day after an offering of 3.8 million Checkfree shares at $39, led by Merrill Lynch & Co. Among the sellers of the stock were Checkfree Chief Executive Officer Peter Kight, who sold 658,122 shares, reducing his stock ownership to 11.1% from 13% before the offering. In a lengthy statement released Wednesday, CheckFree said the market "grossly overreacted" to the banks' announcement. "Three banks will try to create an electronic look-up facility to connect bills with their intended recipients, and they will try to sell this facility to other banks that are each expected to try to sign up billers," Mr. Kight said in the statement. "There was no announcement of any intent to create a pay-anyone capability, no announcement of any pooling of technological resources to create better bills for billers, and nothing that threatens CheckFree." But Bill Burnham, a Credit Suisse First Boston analyst, believes CheckFree may collide with the banks down the road. CheckFree has been developing its own "master site", an online portal that would consolidate bill presentment and payment for consumers and Mr. Burnham said that the Exchange partners will ultimately want to compete in that area. CheckFree investors aren't "reacting to the initial threat so much as they are to the writing on the wall," said Mr. Burnham. The writing says that "... these banks are going to get into payment and operate their own consolidated web site." "There's still stuff for CheckFree to do, but a big elephant just sat at the table," Mr. Burnham said. Pacific Growth Equities analyst Steve Olson was a less downcast. "The stock is assuming the worst case, that the banks are going to go around Checkfree." The best-case scenario for CheckFree, Mr. Olson said, would be that the banks venture will promote the overall market.