Last week's announcement that three major banks had joined in an electronic bill presentment venture could not have come at a worse time for Checkfree Holdings Corp.

The Norcross, Ga., electronic billing and payment processing company was on the brink of a secondary stock offering, for $148.2 million, when Chase Manhattan Corp., First Union Corp., and Wells Fargo & Co. announced formation of The Exchange.

Analysts viewed The Exchange as a threat to Checkfree's prominence in the emerging electronic billing field. Investors reacted by driving down the share price by almost 25% on Wednesday.

The decline prompted Checkfree to launch an aggressive damage-control campaign, including a conference call with chairman and chief executive officer Peter J. Kight and a statement to the media arguing that the market had overreacted.

It called The Exchange "far less significant than some people had feared when they read first reports. ... There was no announcement of any intent to create a pay-anyone capability, no announcement of any pooling of technological resources to create better bills for billers, and nothing that threatens Checkfree."

Yet Checkfree was not in a position to settle on its secondary offering. Wednesday's closing market price of $28.75 was more than 10 points below Monday's $39 secondary pricing for each of 3.8 million shares.

The shares closed Friday at $26.5, down from $39.0625 the previous Friday.

"Our credibility with shareholders was more important than any stock offering," said Mr. Kight in announcing the withdrawal.

Mr. Kight, who had put up a portion of his own Checkfree stake for the offering, said the company was "stung by implications" that it had been dishonest with investors by trying to sell stock before the Exchange banks' announcement.

"None of these banks ever spoke to Checkfree about this effort, nor indicated the formation of this group, nor gave any indication they intended to make the announcement of such an organization," Mr. Kight said.

Checkfree said the reversal on the stock sale would not affect recently announced plans to spend as much as $50 million to expand Internet distribution of bills it processes. Those plans include partnerships with several Web portals and price incentives to spur consumer acceptance of electronic billing.

Steve Olson, senior research analyst for electronic commerce technology at Pacific Growth Equities Inc. in San Francisco, generally agreed with Mr. Kight's assessment.

"The joint venture was a modest negative-it was certainly not worth an almost 10-point reduction in Checkfree stock," he said.

Mr. Olson, who said he had never seen a company withdraw a secondary offering, is keeping a "buy" recommendation on Checkfree. He said its electronic billing revenues come from payment processing, which The Exchange will not address early on. "This is where Checkfree has 90% market share and a formidable competitive barrier," Mr. Olson said, with more than 1,000 connections to major billers' accounts receivable systems.

Richard Zandi, electronic commerce analyst at Salomon Smith Barney, a unit of Citigroup Inc., said the market might have overreacted to The Exchange's near-term economic impact on Checkfree. But the decline also "took some of the air out" of what had become an overly optimistic valuation, in part stemming from a reported deal between Checkfree and a major Internet portal.

The impact on Checkfree volume could be "severe," said a research report by Gary R. Craft, managing director of investment research at E-Offering Corp.-if the three Exchange banks set up in-house settlement and clearing.

In Wednesday's announcement, The Exchange's organizers said they would establish a switch to route electronic bills between the banks' corporate clients and retail customers. The for-profit company plans to invite other financial institutions to participate and said it would consider setting up electronic payment processing. In the meantime, the banks would continue to process bill payments through existing channels, including Checkfree.

Third-party consolidators such as Checkfree and Transpoint, which is jointly owned by Microsoft Corp., First Data Corp., and Citigroup, help corporations format electronic bills and distribute them to Web sites, where consumers can initiate payments.

Merrill Lynch & Co., Deutsche Banc Alex. Brown, Hambrecht & Quist, and U.S. Bancorp Piper Jaffray underwrote the Checkfree stock offering.

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Sanchez Computer Associates Inc., Malvern, Pa., split its stock 2-for-1 last week.

The doubling of shares brought the total outstanding to about 23.6 million.

Based on Friday's closing price of $34.1875, the company's market capitalization stands at $807 million. Before the split, which was effective at the close of trading Wednesday, the stock was trading at $58.50. Sanchez's aim was to increase liquidity, a spokeswoman said.

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