Checkfree Corp.'s patience with banks may be wearing thin.
The provider of electronic bill payment and presentment services has indicated it will adopt a strategy that would lessen its reliance on banks as a distribution channel for its services.
Banks have moved more slowly than Checkfree would like in providing a fertile environment for electronic billing. Only four of the 10 largest U.S. banks have Internet-based home banking capabilities, said Checkfree, quoting Pawan Malhotra, an analyst at Legg Mason Wood Walker Inc.
Checkfree has seen growing interest in its offerings, with nine new billers signing up for its electronic bill presentment service, E-Bill, in the last quarter.
"Billers are now moving substantially faster toward market than the banks are, and they need a distribution system that moves beyond the speed of the banks," said Peter Kight, chairman and chief executive officer of Atlanta-based Checkfree.
Modifying its strategy to meet the needs of billers "means we will be working with other organizations that are Internet-based," he said during a recent conference call with analysts.
Mr. Kight declined to answer questions during that call about specific strategic plans, saying formal announcements would be forthcoming. He did not return phone calls seeking comment for this article.
Mr. Malhotra speculated that Checkfree would pursue relationships with Internet gateways like Yahoo or America Online to deliver consolidated bundles of bills to customers. Checkfree firmly believes in having consumers go to just one site to receive their bills, Mr. Malhotra said.
Mr. Kight told the analysts that he still believes bank Web sites to be the preferred place to deliver consolidated bills via the Internet.
Mr. Malhotra said Mr. Kight was sending a not-so-subtle message to banks to become more aggressive in getting Web-based banking services off the ground,
Checkfree has said the slow progress of banks in developing and marketing Internet-based home banking services has contributed to a fall in its stock price.
The shares fell 41% on Aug. 12, to $13.9375, when the company reported earnings for its fiscal fourth quarter, which ended June 30. The stock hit a low of $5.75 on Oct. 8, compared with $31.50 on July 16.
The first-quarter signing of nine billers that send 250 million bills a month has helped reverse the trend. If 10% of those bills were presented over the Internet, the annual revenue stream to Checkfree would approach $90 million, Mr. Malhotra said.
The stock closed at $15.71 Friday, down 53 cents for the week.
Checkfree reported revenue of $56.8 million the quarter that ended Sept. 30, up 26% from a year earlier. The net loss shrank to $2.7 million from $3.3 million a year earlier.
Also aiding the stock price was the repurchase of 4.7 million shares during the quarter. Checkfree spent $31 million to buy back 8% of its outstanding stock at an average $6.62 a share.
Mr. Malhotra rates Checkfree a "buy" with a 12-month price target of $27 a share.