Here is something I received on Feb 15. I took my own position at 19 1/4........
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In this down market, it is important to find quality stocks that could bounce back big once the market
stabilizes. We are taking a good look at Bottomline Technologies, Inc. (NASDAQ: EPAY). Bottomline
Technologies is a provider of software used to make and manage corporate payments. The
Company's products and services enable organizations to transition from the traditional paper check
process to electronic payments and to facilitate electronic commerce. For the 6 months ended 12/31/98,
revenues rose 34% to $18.1M. Net income applicable to Common totalled $1.5M, up from
$574K. Results reflect growing market acceptance of PayBase32. There are 9.91 million shares
oustanding. The float is 3.40 million shares. It IPOed last week and hit $25 5/8 Tuesday based on a
positive story in Barron's. Currently trading at $19 ¾, we expect it to get some serious attention in the
coming weeks. Most impressive is its relationship with the Federal Reserve Bank and partnership with
Arthur Andersen. They were selected by the Federal Reserve System to provide the necessary software
to enable over 12,000 banks to process electronic payments with remittance information for their
commercial customers. Arthur Andersen LLP is also working with Bottomline to develop a marketing
program and to utilize the enterprise consulting experience of Arthur Andersen LLP to demonstrate the
benefits of migrating to Bottomline's enterprise-wide payment solution. We see the recent decline in price
as a buying opportunity and are looking to accumulate in the $17 to $20 range. The trend is still
downward, so wait for the bottom to show itself. Our target is 50% return or $30 by mid-March.
Brokerage house coverage is expected.
bottomline.com
bottomline.com
Bottomline is a leading provider of software used to make and manage corporate payments. Its products
and services enable organizations to transition from the traditional paper check process to electronic
payments and to facilitate electronic commerce. They provide a single platform to control, manage and
issue all payments. Their software complements and integrates with existing corporate payment
applications, such as accounts payable, payroll, travel and entertainment expense, insurance claims and
commissions. Bottomline's products provide Internet capability and run on Windows NT. Bottomline
currently has over 2,000 customers representing every major industry sector, including The Charles
Schwab Corporation, Dow Jones & Company, Inc., Harvard University, Microsoft Corporation and
Nissan Motor Acceptance Corporation.
Most enterprises today still rely on pre-printed, paper checks to generate and receive payments. It is
estimated that in 1997, United States businesses issued or received paper checks in approximately 73
billion transactions. With the significant growth of the Internet and electronic commerce, many
enterprises are seeking to implement a cost-effective, secure, electronic payment system. The National
Automated Clearing House Association ("NACHA") estimates that the cost of a business-to-business
electronic payment averages $3.00 compared to $8.33 for a similar paper-based payment. NACHA
estimates that approximately 4.4 billion automated clearing house payments were made in 1997, an
increase of approximately 430% since 1991. Bottomline's software modules permit customers to
leverage the flexibility of the Internet while increasing security and fraud avoidance. They also offer
consulting services and related equipment and supplies to help customers plan, design and implement the
transistion from paper to electronic payments. Bottomline's objective is to be the leading provider of
enterprise-wide payment solutions.
In addition to their direct selling efforts, they also promote their products and services through
relationships with enterprise resource planning and accounting system vendors, such as Oracle and SAP,
and implementation consultants. They recently entered into a working agreement with Arthur Andersen
LLP. Under the working agreement, Arthur Andersen LLP will work with Bottomline to develop a
marketing program and to utilize the enterprise consulting experience of Arthur Andersen LLP to
demonstrate the benefits of migrating to Bottomline's enterprise-wide PayBase/32/ payment solution. In
March 1998, they were selected by the Federal Reserve System to provide the necessary software to
enable over 12,000 banks to process electronic payments with remittance information for their
commercial customers.
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Barrons (2/15/99)
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Many IPOs, especially Internet-related deals, offer investors little more than hope for glorious profits at
some time in an undefined and unpredictable future. The shrewd investor is in and out of most such
deals within three to six months, returning only if prospects look good.
Software developer Bottomline Technologies looks like the exception because it's a real company with
solid products for an already defined and growing market. Bottomline already has an impressive list of
customers and has established an alliance with Arthur Andersen that's likely to bring more clients to its
door. The deal is likely to fatten the bottom line of investors' portfolios and the company's stock looks
like a buy and hold.
Bottomline's software allows companies to make the switch to electronic payments from paper checks
and to move into electronic commerce. It enables users to integrate existing payment applications,
including accounts payable, payroll, travel, entertainment, insurance claims and commissions. The
programs include Internet capability and run on Windows NT, Microsoft's network technology.
Bottomline's PayBase software is designed to control, manage and issue paper-based or electronic
payments across a computer network. It includes Internet security. The company's LaserCheck printing
system allows users to streamline the payment of paper checks and to cut checks at the point of need.
The company also offers consulting services and related equipment to help users plan, design and build
for the move to electronic commerce.
The company recently joined with Arthur Andersen to develop a marketing program that will use the
consulting firm's experience to show the benefits of switching to PayBase. In March 1998, Bottomline
Technologies scored a major coup when the Federal Reserve System selected it to provide software that
will allow as many as 12,000 banks to process electronic payments for commercial customers.
Bottomline's customers include major companies, governmental agencies and universities, such as Aetna,
Bankers Trust, Dell Computer, Kaiser Permanente, Lands' End, Microsoft, Charles Schwab, Nissan
Motor Acceptance, Harvard University and the University of Chicago. It recently added Internet
bookseller Amazon.com.
For the six months ended December 31, 1998, the company reported net income of $1.5 million on
revenues of $18.1 million, compared with net income of $627,000 on revenues of $13.5 million for the
same period a year earlier.
"This company has a solid track record and a strong peer group," says Jennifer McBrien, an analyst at
Renaissance Capital, a money-management and institutional IPO research firm in Greenwich,
Connecticut. "After some financial problems in fiscal 1997, which the company attributes to writeoffs
from an acquisition and inventory problems, the financials are solid."
On Friday, Bottomline Technologies, of Portsmouth, New Hampshire, priced 3.4 million shares,
including 880,534 by current stockholders, at $13 each after price talk of $11-$13 through underwriters
led by BancBoston Robertson Stephens. The stock opened at 19, reached 25 ½ and closed at 20 15/32.
Net proceeds will be used for product development, international expansion and possible acquisitions.
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On another note, a few people expressed dismay that PRFM did not hit our target of $15 to $20. Suffice
it to say we were disappointed. However, the stock did increase over 100% from our call in a matter of
a few days. The CFO's resignation was a spiteful act meant to wound the company, and it succeeded. It
came as a complete surprise to us. Depsite the agreements with Microsoft, Lycos, and Alta Vista, the
stock failed to hold it's ground. We cannot stress this enough, you should all lock in profits when the
opportunity presents itself. Also, please use stop limit orders to protect yourselves.
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