CheckFree's Q4 falls short of expectations

CheckFree's Q4 falls short of expectations

Shares in US e-payments vendor CheckFree Corporation plummeted 21% in after hours trading yesterday after the company posted fiscal fourth quarter earnings below market expectations.

The stock fell 3.1%, $1.37, to $43.13 during regular trading hours on Nasdaq, but fell a further 21.1% or $9.08, to $34.05 in after hours trading. The stock had traded as high as $56.50 earlier this year.

CheckFree says the consumer transaction growth at its electronic commerce division was "soft" for the quarter, especially in April, resulting in quarterly growth below expectations.

Pete Kight, CheckFree chairman and CEO, told reporters that temporary disruption at the firm's biggest bank customer, fewer billing cycles April and reduced walk-in customers were to blame for the shortfall.

Kight says people who skip payments were clearly up in the tax quarter and that a large number of credit card payments may have been delayed.

The vendor reported fourth quarter revenue of $224.9m, a 12% increase from the same period last year, but analysts had expected the company to post $230.1m. Net income rose to $29.4m, or 31 cents a share, up from $11.9 million and 13 cents a share a year ago.

But excluding items, the company would have earned $36.5m, or 39 cents a share, unchanged year over year but analysts had expected the company to earn 41 cents a share.

The vendor's CFO David Magnum told reporters the company was "surprised" by the April slow down, but insisted that forecast growth would improve in fiscal 2007, based on better results in July.

"We project sequential transaction growth of four to seven per cent in the first quarter of 2007 in our electronic commerce division," says Mangum in a statement.

Looking ahead CheckFree estimates first quarter revenue of between $226m and $231m with underlying earnings per share in the range of $0.37 to $0.39.

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