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

To: Triffin who wrote (2422)	2/9/1999 8:19:00 AM
From: Sam Biller	Respond to of 20297

Is CheckFree a rule breaker? In order for it to qualify as a rule breaker, it needs to fulfill all six of these criteria. IMHO, it falls short on #3 and possibly #5. #6 is questionable. Question 1: Is ckfr the top dog and first-mover in an important, emerging industry... Answer: There is no doubt that CheckFree is the industry leader in the enormous emerging market of Electronic Bill Payment and Presentment (EBPP). They have contracts with more than 30 of the nation's largest billers to provide end-to-end electronic billing and payment. One of the 30 billers is AT&T, the largest billing company in the world. In addition, First Union recently became the first bank to offer EBPP using CheckFree. CheckFree is the only company providing e-bill through Quicken at this time and they have signed an internet distribution agreement (rumored to be with Yahoo) for EBPP through internet portals. Question 2: Does CheckFree have a sustainable advantage gained through business momentum, patents, visionary leadership, and/or inept competition... Answer 2: CheckFree has been presenting e-bills for more then a year while their competition, TransPoint hasn't released a single e-bill (outside of a pilot). Its only significant competition, TransPoint, can not pay a bill if it is not presented electronically. CheckFree offers the ability to pay online any bill, whether or not it is electronically presented. CheckFree has bill payment contracts with more then 350 financial institutions, Intuit, and even Microsoft. CheckFree provides electronic payment services for more then 2.5 million home banking subscribers today. In addition, bill payment relies on economies of scale which its only competition, TransPoint is unlikely to achieve since the competition relies on CitiGroup's (formerly CitiBank's) pay anyone capability. If a bank wants to use TransPoint, it is required to share sensitive customer payment data with a major competitor. Question 3: Excellent past share appreciation, measured by a relative strength of 90 or higher. Answer 3: CheckFree has certainly had a nice run-up from last August's lows but the relative strength is floating around 50 right now and hasn't surpassed 90 for any period of time. This may change in 1999, with the emergence of EBPP, but until then the answer to this question would have to be No. Question 4: Good management and smart backing... Answer 4: I think most of us would agree that P. Knight is an excellent manager although he could be faulted for projecting earnings well into the future (last year) without the ability to meet those earnings estimates. His sacrifice of short term earnings to make CheckFree a gorilla, IMO, is a sign of good management. Question 5: The greater the consumer brand, the better... Answer 5: CheckFree is not well known at this point. Perhaps the portal agreements will change that. CheckFree is well know with the billers and banks. Question 6: A significant constituent of the financial media is recently on record calling it overvalued. Answer 6: Probably yes... Jubak recently recommended selling his shares and there have been a couple downgrades, of late. There hasn't been a lot of coverage started recently and so the financial analysts may see CheckFree has overvalued at this point. Even the strong bulls on this investment board think the stock is heading lower in the short term. In summary, sometime this year, CheckFree may emerge as a Rule Breaker, and meet all of the foolish criteria. Sam (IMHO)