Checkfree Corp. investors should take in stride Citibank's decision last week to join TransPoint, the electronic bill presentment venture of Microsoft Corp. and First Data Corp., several analysts said.
Citibank's equity and back-end bill-payment technology could help TransPoint, formerly MSFDC, challenge Checkfree, which is the leader in processing electronic bill payments and a provider of presentment services.
But analysts say they expect Checkfree to weather the storm.
The announcement has raised the sense of urgency among banks and technology vendors to make electronic delivery of bills part of their home- banking and bill-payment plans, said one observer.
"Presumably, this would speed home-banking adoption, which would in fact benefit Checkfree," said Richard Zandi, an analyst at Salomon Smith Barney.
Atlanta-based Checkfree cited banks' passive marketing of home-banking services when it recently lowered 1999 revenue and earnings projections.
Despite the positive spin, Mr. Zandi maintained a neutral rating on Checkfree's stock, acknowledging the market's pessimism. Checkfree's stock declined $2 last week, to $10.25. The price is down 56% from its level before Checkfree released the revised earnings estimate on Aug. 11.
Mr. Zandi also said Citibank's decision to buy into TransPoint eliminates the possibility of Checkfree acquiring the business, a strategy Checkfree has employed with success in the past.
Checkfree purchased Intuit Inc.'s bill-payment processing unit in 1996 for $227 million in stock. It formed a partnership with the Integrion home- banking consortium last year and entered into a joint venture with Visa U.S.A. in May.
Brian Maimone, analyst at ING Barings Furman Selz, maintained his "buy" on Checkfree, saying it has a two-year technological lead over TransPoint.
Also in Checkfree's favor, he said, is that banks would strongly object to signing on with TransPoint with Citicorp's flagship bank in the mix.
"Do banks perceive Citibank as a friend or a foe?" Mr. Maimone asked. BankBoston is currently the only bank using Citi's bill payment system.
Mr. Maimone also questioned the role of First Data now that Citibank is on board. The Hackensack, N.J.-based card processor was to have supplied much of what Citibank is now expected to.
"The fact that Citibank is going to be the bill-payments engine suggests that First Data does not really add value from the bill payment perspective," he said.
First Data, which lowered its earnings projections last week (see page 13), closed at $24.75 on Friday, up $1 from the previous Friday.
Hank DeNero, executive vice president of First Data Corp., said speculation about what the company's role will be was baseless. First Data and Citibank are to split back-end processing duties, depending on whether a bill is presented electronically, he said.
"This is the most important new business that First Data is pursuing, for both strategic reasons and growth potential," he said.
