Mixed Financial Results For CheckFreeMixed Financial Results For CheckFree

Not impressed with a 49% increase in subscribers and a 38% increase in revenue by electronic-billing leader CheckFree Corp., Wall Street focused instead on the company's widening net loss following its quarterly earnings call this week.

Even while noting that it believes CheckFree is the "clear leader in electronic-bill presentment and payment, a market we consider promising long-term," and "despite a solid, relatively in-line" quarter, Merrill Lynch reduced its subscriber, revenue, and earnings-per-share estimates for CheckFree and lowered its rating from "accumulate/buy" to "neutral/buy." In a tough economy, implementation of systems that E-mail bills to consumers "could remain sluggish," says Merrill Lynch analyst Ed McCabe, and "we do not believe the stock will appreciate meaningfully until we can confidently forecast more accelerated growth."

CheckFree executive VP and CFO David Mangum notes that the company's net loss of $87.7 million, or $1.01 a share, for the quarter ended June 30 included the costs of acquiring two software companies, TransPoint and Blue Gill Technologies. On a pro-forma basis, the loss was just $779,000, or 1 cent a share, compared with $3.3 million, or 6 cents per share, for the quarter last year. Merrill Lynch now expects CheckFree to tally $533 million in revenue and 7.7 million subscribers by the end of 2002.

CheckFree distributed half a million bills and processed more than 22 million transactions in the quarter ended in June, up from 90,000 bills and 16 million transactions for the same quarter last year. The company says it's on track to handle nearly six million bills in the coming year, and expects to be profitable in 2002.