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Technology Stocks : CheckFree (CKFR) -- Ignore unavailable to you. Want to Upgrade?

To: Brooks Jackson who wrote (1463)	2/1/1998 4:32:00 PM
From: Gullapalli	Respond to of 8545

Here is what Jim Jubak said...... Analysis by Microsoft Investor's Jim Jubak I have found one example -- Checkfree (CKFR) -- that's just right. (I own shares purchased about two years ago. Hey, I was early.) Adding new subscribers for its electronic-banking and bill-payment service drives growth at Checkfree -- that's pretty simple. At this point in the company's life, the benefits of scale are really starting to kick in. The company reports that at the end of December, 2.2 million people were using its electronic-banking and bill-payment service. That's up 70% over the December 1996 quarter. Revenue grew by 47% year to year. Checkfree, which once tried to grow its business by mailing free software to individual consumers just as America Online (AOL) does, now acquires most of its new users by signing deals with big banks. In 1997, for example, deals with Wells Fargo (WFC), Citicorp (CCI), NationsBank (NB) and Chase (CMB) funneled new users to the company. In the second half of 1997, Chase alone was sending Checkfree 25,000 new customers a month. That makes growth at Checkfree lumpy -- a big deal one quarter pushes up the growth rate, a smaller deal the next sends it down -- but also remarkably transparent. By tracking the number of big deals that Checkfree is signing (you'll find a link to the company's Web site at the bottom of this page), an investor can get a good idea of what growth will look like in future quarters. Right now I like the stock because of a deal that Checkfree signed with the Integrion Financial Network last October. Integrion is a consortium owned by big names in banking such as Banc One (ONE), Bank of America (BAC), First Chicago (FCN) and Fleet (FLT). IBM (IBM) is the group's technology partner. The deal incorporates Checkfree's electronic-banking and bill-payment system into the online banking platform that the group will roll out in 1998. In its Jan. 27 conference call, Checkfree predicted that six of the Integrion banks will be up and running in the current quarter with the rest to follow. That should produce another big lump of growth for the company. The timing of that growth couldn't be much better. In the just-completed quarter, Checkfree reduced its loss to 2 cents a share (far better than the 4 cents a share loss projected by analysts). The company is on track to report its first break-even quarter in April. That will give the stock new visibility and should push up the price as those institutional investors who, by their charter, can't buy companies with losses are now able to buy shares. I'm adding Checkfree to Jubak's Picks with a 12-month target price of $35 a share. (It doesn't hurt that the deal with Integrion also brought Visa, a Checkfree competitor, into the fold.) Jubak's Picks . . . Checkfree (CKFR) is one of the leaders in the fast-growing but wildly immature business called electronic commerce. The company builds the systems that allow bank customers to pay bills electronically and that, increasingly, let companies such as utilities send their customers electronic bills. It's on the edge of profitability, according to both Checkfree executives and analysts, who look for it to go into the black in the current quarter. And it should see a big surge in new customers from a deal last October with the Integrion banking combine. Revenue grew at better than 45% (year to year) in the most recent quarter as the company increased its customer base by 70%. (Full disclosure: I own shares in Checkfree.)