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

To: Longterminvest who wrote (6786)	8/13/1998 2:15:00 PM
From: pat mudge	Read Replies (1) \| Respond to of 8545

H&Q Maintains BUY Highlights from report: * CheckFree reported EPS in-line with our estimate of $0.03. * However, bill processing revenues were below our expectations by $3 million. Specifically, bill processing revenues were $36.5 versus our expectation of $39.0 million. * Sequential subscriber growth was 6% versus our expectation of 8%. Sequential bill payment processing revenues grew at only 3% as subscriber minimums have not yet been achieved by some of the more recent banking customers. * We are lowering our 1999 EPS assumptions from $0.32 to $0.12 on a $20 million reduction in revenues, from $267 million to $247 million, to reflect less aggressive subscriber growth assumptions. * These new estimates assume sequential subscriber growth of 4% during the first half of the year and 5% to 6% during the second half. * So if the banks are moving more rapidly than expected to the internet (which should be a positive for CheckFree), then why the subscriber growth rate slowdown? 1) A number of CheckFree customers have decided to move more quickly than expected to the Internet platform from CD-ROM-based PC home banking solutions in response to competitive pressures from such early adopters as Citicorp and Wachovia who are successfully utilizing Internet-based home banking solutions to acquire new customers. As a result, these banks have essentially abandoned their marketing efforts on the PC-based solutions while readying their Internet solutions. Hence, a number of key CheckFree customers are in transition with respect to their home banking subscriber ramps and CheckFree is experiencing a higher trough with respect to its own transition than originally anticipated. Unfortunately, CheckFree has very little control over the marketing/timing plans of the banks and therefore has minimal direct control over subscription growth rates. The positive side of this is that once the banks get going with their marketing plans, CheckFree will benefit as the company acts as the back-end processor for electronic bill payment for 9 of the top 10 banks and over 40 of the top 100 banks in the country. In total, the company has relationships with over 275 financial institutions. Four of CheckFree's largest 10 banking clients are expected to migrate to Internet systems by the end of this calendar year, while 75% of the top 65 clients are expected to migrate to Internet systems in fiscal 1999. 2) The numerous mergers that have occurred among key bank customers are slowing down implementations of home banking problems. CheckFree is working with existing customers to help them converge their home banking programs as quickly as possible. We believe that our 4% to 6% sequential subscription growth assumptions adequately reflect the transition risk during 1999. We now expect the company to achieve 3.1 million subscribers by the end of fiscal 1999. Our calendar 1999 EPS estimate now stands at $289 million in revenues and $0.43. We are establishing a fiscal 2000 EPS estimate of $0.66. Hence, currently trading at a market cap/rev ratio of 2.8 times our calendar 1999 estimate, we believe that these shares have over corrected. With a dominant market share position with respect to financial institution partnerships within the electronic bill payment arena, we continue to believe that CheckFree remains well positioned to be a major beneficiary of the exploding Internet-based electronic banking opportunity as it ramps, and also represents an attractive acquisition candidate at these levels. Hence, we believe that today's significant price drop represents a buying opportunity.

To: Longterminvest who wrote (6786)	8/13/1998 2:31:00 PM
From: micny	Read Replies (1) \| Respond to of 8545

To: ????term?????? Burton is a legitimate concern, but I find it hard to imagine anyone following Craft, given his dismally inaccurate assessment of the industry and the companies he has followed, let alone his pettiness with respect to non-analytical considerations. Further, neither of them seem to have been capable of identifying the reason for the sub anticipated adoption. In other words, while they now prove to be right, they didn't know they were. I don't disagree that Pete/management screwed up, first by misjudging where the banks stood (and its effects on the companies financials...thus Douglas' exile), and secondly by publicly affirming the consensus estimates of a group of REPORTERS masquerading as analysts, who seem unable to accurately judge, on their own, how the company/market is doing, or to draw any reasonable conclusions on their own. Now they are all embarassed because it shows that they haven;t been doing their jobs, and they cause a overreaction, which hurts shareholders much more than it should. Is this why you're suggesting it won't get back to @20 soon??

To: Longterminvest who wrote (6786)	8/13/1998 4:31:00 PM
From: AugustWest	Read Replies (1) \| Respond to of 8545

>>The analyst who matter to this stock are Pat Burton-Lehman Brothers Gary Craft - Robertson Stephens<<<< Crafts CrapNote that Craft leans toward software companies in the area of electronic payment. Basically, if the market moves to outsourcing and away from do-it-yourself with software, then his recommendations of software companies gets negatively impacted. So he will always trail the pack in regards to CKFR. Generally, I think his insights into the market are clouded by conflicts and his personal dislikes of past events with CKFR. Also note that CKFR has strong ties with BT and HQ, which doesn't sit well with Craft. In other words, who put the stains on his blouse? and get your facts correct if you're research analyst, and (lol), a money manager! P.S. Mincy(that's not hard to type) thanks for the best wishes.....