Stock of Checkfree Holdings Corp., which is facing a lawsuit from its largest shareholder, took a wild ride last week.

Intuit Inc. of Mountain View, Calif., which owns 19.9% of Checkfree, says the payment processor violated an agreement related to the distribution of electronic bills.

The suit against Norcross, Ga.-based Checkfree, filed in a California court at midweek, triggered mixed responses from the stock analyst community.

Lehman Brothers downgraded Checkfree to "neutral" from "outperform," saying the dispute could hurt revenue. Lehman maintained a low price target of $15 a share.

J.C. Bradford & Co., Nashville, also downgraded Checkfree, from "strong buy" to "buy."

But Legg Mason Wood Walker Inc. of Baltimore took the development more in stride. On Friday morning it boosted its rating from "outperform" to "buy" and reiterated its $42 price target. "We believe Checkfree will try to reach an amicable settlement with Intuit," said Pawan K. Malhotra, a Legg Mason analyst.

Piper Jaffray Inc. in Minneapolis maintained its "strong buy" rating, with a price target of $53 a share.

Checkfree's stock fell $4, to $31.50, on Thursday, the day Lehman issued its downgrade. It rebounded on news of Legg Mason's upgrade, closing Friday at $33.50, down 20% from its Jan. 29 high of $42.

According to a Lehman analyst, Heather Bellini, and Mr. Malhotra, Checkfree and Intuit had an agreement to distribute electronic bills from Checkfree exclusively through Intuit's Internet portal,, until October 2000.

Checkfree's Jan. 26 deal to deliver bills through a major Internet portal, rumored to be Yahoo Inc., became the sole exception to this agreement, these sources said.

Intuit alleged that Checkfree "went to all the other major portals and started trying to sign similar agreements," Ms. Bellini said.

The Checkfree-Intuit relationship began in 1996, when Checkfree paid $227 million in stock to buy Intuit Services Corp., a bill payment processor. Intuit, which sells the Quicken personal financial management software, contributed between 15% and 20% of Checkfree's 1998 electronic commerce revenues of $137.9 million.

Now the companies are engaged in a high-stakes game of chess, said Gary Craft, analyst at BancBoston Robertson Stephens.

Intuit has apparently concluded that a "$100 million loss on paper" from Checkfree's stock depreciation is justifiable in light of the "billion- dollar" opportunity of bill presentment, he said.

Every person that signs on to a service through another portal is "one less potential customer for Intuit, and that could be devastating," Mr. Craft said.

Mr. Malhotra said the most Checkfree can expect from its portal strategy is more awareness of electronic bill payment and presentment services. He said he is convinced that bank Web sites are the best places to present bills and that Checkfree will not add subscribers until more banks participate.

Intuit and Checkfree officials were not commenting on the litigation, though Checkfree issued two public statements claiming the market was overreacting and misinterpreting the lawsuit.

"Regardless of the outcome of this action, Checkfree will be supporting bill presentment and payment through Internet portals and will be fairly compensated for its efforts," the statement said.

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