My only question now is how much of the portfolio do I now sell to buy more CKFR. I am thinking if we break 25, all of it. :) From Briguy on Raging Bull:
EVERYONE MUST READ THIS NOW IF YOU OWN CKFR...
First, AMatteroftime is absolutely correct! Read his post as everything he said is right on the
money! Banks are scared to death of CKFR and are trying to damage CKFR's reputation as
the undisputed king of the hill in this business. This is war ladies and gents. And with war, one
needs some intel to decipher whats going on behind enemy lines. Well, let me share some
intel with you....
First, let me offer you some a summary of a recent report by BANCBOSTON ROBERTSON
STEPHENS:
In our view, there is a serious misbelief that the bill, when converted into electronic format, by
necessity, must find the customer's payment source. Hence, the bank must stand as in
between. NOTHING COULD BE FURTHER FROM THE TRUTH (emphasis added), and
such a belief is one of the SERIOUS SHORTCOMINGS (emphasis added) to banking
strategies today. Under most scenarios, banks will intermediate the exchange of bills and
payments between the customer and the biller. In others cases, the bank is only a passive
funds transfer source. If the biller and customer have a new way to exchange these
transactions away from the bank, then so be. Unfortunately, no one in banking is willing to
say-"The Emperor has no clothes."
How about a recent report by FIRST UNION CAPITAL MARKETS in which it said CKFR has
Dominant Market Share In This Rapidly Growing Market. With approximately 80% of the
online bill payment market and market leadership in bill presentment, CKFR should garner
the majority of this market which is expected to grow 46% per year.
How about this summary of a recent report by Report by BANCBOSTON ROBERTSON
STEPHENS in which they state: We are changing our inveterately neutral status on the
Checkfree shares to a Long-Term Attractive based on the bold and what appears to be
INTELLIGENT approach by management to expand its sphere beyond banks to include
consumer direct Internet portal channels. In its conference call today, management cited it
would bridge the difference between retail and wholesale strategies by allowing bank
branding to occur. In so doing, Checkfree is emulating a similar strategy of Cybercash
through its InstaBuy Wallet that allows bank branding to occur. To the extent banks choose
not to participate, then Checkfree would appear to be reverting to a retail strategy which
could cause some earnings disruption. This tradeoff appears to us WISE since its long-term
survival depends on subscribers, not necessarily the banks that are currently subscribers. In
effect, Checkfree could be willing to take one step back to move two steps ahead. (AMEN! I'll
take 100 million portal customers ANYDAY over the banks!)
Another summary of a recent report by ABN AMRO INC: "CKFR currently is the leading
provider of electronic home bill payment services to consumers, with an estimated 75%
market share. CheckFree is also well positioned to capture a large share of the emerging
EBPP market, a potential $10 billion market. We anticipate that the company will benefit
from cost efficiencies once the company's three bill payment platforms are consolidated
under the Genesis project. We anticipate that as the EBPP market emerges, CKFR's
revenue and earnings growth will accelerate."
Here's a twist: In that same report, ABN AMRO said, "Currently, six major financial
institutions, which we believe include Key Bank, Wachovia, First Union, Wells Fargo, Chase
and Schwab, offer Web-based banking solutions. We anticipate that marketing by these
institutions will accelerate in coming months. Further, we anticipate that a number of other
financial institutions will go live with Web-based solutions during the next six months.
Subscriber growth should accelerate once live financial institutions begin to aggressively
market their Web-based solutions and other banks introduce their Internet bank offerings.
However, we are conservatively maintaining our 6% quarterly sequential subscriber growth
assumption for the balance of the year and 3.0 million subscriber projection at the end of
FY99."
What's the twist you ask? For starters, this report came out around the beginning of February
I believe. Pretty prophetic eh? But more importantly, after TEX (The Exchange) was
announced, ABN AMRO reiterated it's BUY RATING on CKFR! That's right, it just happened
days ago. Proof? Check out www.nordby.com. So obviously, inspite of ABN AMRO
expecting this kind of announcement from some of these banks, they still believe CKFR is
worthy of a BUY rating! And they should as CKFR will still be king of the hill.
ABN continued in that report, "We do not anticipate meaningful revenue (to CKFR) from bill
presentment until the latter part of FY 2000 and accordingly have not included bill
presentment revenue within our projections. However, our projections may prove
conservative (YUP!) The Mentis Group recently indicated that the majority of high-volume
billers will provide bills electronically near term. More specifically, Mentis predicts that 40% of
all bills will be available over the Internet by the end of 2000.
People, are you starting to get the picture? Did you catch that last line? 40% of all bills will be
available over the Internet by the end of this year! And that is EXACTLY what CKFR is going
after with their portal distribution strategy! Buy now while the blood is being spilled! Hold it for
a year or two and you will be sitting on AOL type profits! Still not convinced? Well...
Consider this: On March 6, of 1998- YES, 1998- not 1999, the Atlanta Constitution wrote:
HOW THE STOCKS FARED Bargain hunters help CheckFree halt an 18% drop
Summary: CheckFree Holdings (ticker symbol CKFR) reversed a seven-session slump on
strong volume Thursday. Analysts attributed the 12 1/2-cent rise (don't laugh- it's not the
point) to $20.56, in part to bargain hunting at the end of an 18 percent slide. Folks, if CKFR
was a bargan at $20.56 over 1 YEAR AND 4 months ago, it certainly is a bargain today at 26
and change!
O.K., how about another summary of a Report by FIRST UNION CAPITAL MARKETS in
which it wrote: We believe that CKFR is establishing and extending its leadership as the
DOMINANT (emphasis added) provider of electronic bill payment and presentment. It is
focusing on distributing its product through farsighted commercial banks and Internet portal
companies. We believe that CKFR will team up with Yahoo! (YHOO-OTC-$182 3/4) in the
summer to supply YHOO with bill presentment and online payment but that much of the
speculation concerning this partnership is already in the stock. While we believe that CKFR
will continue to establish its dominance in this space, uncertainty over near-term gross
margins and our own valuation analysis cause us to keep our Outperform rating at the current
time. PRICE TARGET: $60
Fair enough, considering this report appeared on or about April 28, 1999. One very
important thought should be noted. First Union said much of the Yahoo hype was built into the
stock. Well, on April 28, CKFR was a $53 stock. Today, it's half that price. For all you
doubters out there, when the Yahoo news is finally released (to be very soon), don't be
suprised to see a BIG jump as CKFR is STILL relatively unknown- although all the recent
news sure is helping CKFR in a disguised way.
To continue...
An older report by ABN AMRO INC from a little over six months ago stated, "Online banking
anticipated to grow rapidly in 1999. We anticipate that most of the largest banks will
introduce their Internet banking offerings in 1999. A recent market research survey suggests
100% of the top 50 US banks will offer online banking by year-end 1999. CKFR expects 8 of
its top 10 clients and 75% of its top 65 to offer Internet-based banking services by the end of
fiscal 1999. Once large institutions come on line and begin to aggressively market their
service, we expect to see an acceleration in online banking customers. Certain early
adapters are seeing significant growth. One large financial institution is adding more than
2,000 accounts per day and projects 1 million of its customers will be on line by year-end
1999. Integrion, the bank consortium, is also adding 2,000 accounts per day for its Internet
Bank service. Some other smaller banks, although they do not have large customer bases,
also provide some early evidence for how rapidly this market could grow. One early online
banking adapter projects its customer-penetration rates may reach as high as 10% by the
end of this year (1998). A recent Forrestor Research projection estimates more than 17
million customers will bank on line by 2002. There is not a direct correlation between online
banking growth and CheckFree's subscriber growth figures (dependent upon a given
institution's fee structure and bill-pay strategy). However, we view the growth of online
banking as a leading indicator for CheckFree's subscriber growth rates." (In other words, the
more banks that promote online banking, more attention will be brought to CKFR!)
Oh, and how could we forget CHECKFREE AND COX COMMUNICATIONS SIGN
AGREEMENT
Summary: CheckFree (Nasdaq: CKFR) and Cox Communications, Inc. (NYSE: COX), one of
the nation's leading broadband communications companies, today (5-4-99) announced an
agreement that will soon provide nearly 3.8 million Cox customers access to online electronic
billing and payment (EBP) through a central Web site of their choice.
Anyone remember this report by WHEAT FIRST UNION from last October? In it they said,
"While the current market volatility and downward estimate revisions have taken their toll on
CKFR's stock, we maintain that this stock has near-term upside potential. CKFR has a
defensible niche in the payment processing industry and its LONG-TERM prospects remain
POSITIVE, in our opinion. The more aggressive stock repurchase plan reconfirms our belief
that management will continue to take actions to enhance shareholder value in the near- and
intermediate-term. Moreover, we believe that the recent investment by Citigroup
(CCI-NYSE-$35 7/16) into the newly renamed Transpoint MS/FDC joint venture, has put
CKFR in a more ADVANTAGEOUS position against its most significant potential rival. We
believe that the CCI investment will limit Transpoint's appeal to large banks that are
concerned (rightfully so) that CCI has an interest in capturing their customers. With positive
developments occurring for CKFR, we reaffirm our Buy rating in these shares for investors
with a long-term investment horizon."
What's interesting about this report is Wheats view that competition will actually benefit
CKFR.
With all that being said, I'll end with this report by FIRST UNION CAPITAL MARKETS (it
bears repeating): CKFR Has Dominant Market Share In This Rapidly Growing Market. With
approximately 80% of the online bill payment market and market leadership in bill
presentment, CKFR should garner the majority of this market which is expected to grow 46%
per year.
I'll tell you what. This is a strong buy if I ever saw one. For those that bought high, average
down. For those looking to get in the first time, consider this selloff a BLESSING! And don't
buy into the conspiracy theories that the recent upgrades and reiterations of buys (in the last
few days) are so that they can dump shares while you buy them. NONSENSE! I highly doubt
JP Morgan, Deutsch and ABN AMRO would scream buy to their clients while dumping.
Briguy |
