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June 28, 1999 CheckFree's Stock Takes A Hit Stock in CheckFree Corp. took a fall last week when three heavyweight banks-Chase, First Union, and Wells Fargo-said they are forming a company to help financial institutions handle online bills. CheckFree, the dominant provider of technology for presenting and paying bills on the Internet, saw its shares plummet 30% on the news. CEO Pete Kight tried to assure investors that the banks are not competing directly with CheckFree, but investors were unconvinced. The timing of the banks' announcement couldn't have been worse for CheckFree. Two days earlier, the company priced a follow-on stock offering of 3.8 million shares at $39. But after the banks struck, CheckFree's stock was trading around $28, and it withdrew the issue. One partner of the three banks said the wake-up call may force CheckFree to focus more closely on its online billing efforts. If that doesn't work, the stock may not be the only thing to fall. |
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