Checkfree Holdings Corp. said its purchase of BlueGill Technologies Inc., announced last week, would have a negative impact on earnings.

The purchase of privately held BlueGill of Ann Arbor, Mich., would lessen Checkfree's earnings by about 10 cents per share before amortization charges, Checkfree officials said.

The Norcross, Ga.-based company has yet to determine how the purchase might affect its long-term finances. Peter Sinisgalli, chief operating officer at Checkfree, said it probably would be positive.

"The dilution means we'll lose money near term," he said. "I would expect BlueGill and Checkfree to turn the corner in the not too distant future."

Checkfree reported a net loss of 8 cents per share in its first fiscal quarter, which ended Sept. 30, compared with a loss of 5 cents per share for the same period a year earlier. It is on track to produce $304 million in fiscal 2000 revenues, up 22% from last year.

Despite that relatively modest revenue growth, Checkfree's stock performance in calendar 1999 exemplifies the phenomenal rise in market valuations enjoyed by many bank technology vendors in the electronic commerce and Internet areas.

The stock was trading midday Thursday at $97.75, up 10% last week and 318% for the year. Analysts justify the valuation based on the company's dominance in the emerging electronic bill payment and presentment field.

Jeffery Baker, an analyst with SunTrust Equitable Securities, said venture capitalists are shying away from Checkfree's competitors, saying the operation that Checkfree has built is "difficult to replicate." He has a "strong buy" rating on Checkfree and a target price of $125 a share.

"One of the hardest things about this space is getting comfortable with the valuations," he said. "Everyone is looking at these companies on a price to sales opportunity, but we try to look even further than that at the market opportunity."

Checkfree is not the only electronic-commerce vendor enjoying boom times.

Harbinger Corp. of Atlanta, which botched its attempts to integrate a slew of companies it acquired in recent years, is back on track. Shares of Harbinger, which sells business-to-business electronic commerce software and network services, traded midday Thursday at $30 a share, up 276% for the year.

Other winners in 1999 include HNC Software Inc. of San Diego, whose stock was trading at $81 Thursday, up 100% for the year, and S1 Corp. at $81, up 166%.

Digital certificate provider Verisign Inc., which announced last week that it would acquire the Internet payment company Signio and the No. 2 provider of digital certificates, Thawte Consulting, is trading at an amazing $175.50 a share. That compares with just $14.871 at the end of last year, adjusted for several stock splits.

Mr. Baker said investors are looking for the next Microsoft.

"In order to do that, you have to get in early," he said. "Hopefully, you are buying companies that will be infinitely profitable as far as a return, offsetting the ones that go to zero. There will be some companies you buy that will go to zero."

Ross Snel contributed to this article.

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