Allstate, of course, says it isn't cutting back, and went so far as to issue a press release Tuesday to say that its "integrated" strategy of allowing customers to reach the company through call centers, or over the Internet or through independent agents was "on track." The release, it seems, followed a Monday story on A.M. Best's BestWire, which apparently quoted Allstate direct distribution and e-commerce president Steve Groot as saying that the Internet part of the strategy is not in the budget for next year, as Schroeder said she had previously been led to believe.

I didn't see the BestWire report, but it was cited by Schroeder in a research report that hit First Call about two hours after Allstate's press release. The concern is that Allstate is trying to jury-rig its existing, antiquated "Allstar" technology, which uses a DOS-based 16-bit operating system and was designed for internal use by agents -- rather than go ahead with its earlier plans to give customers competitive, state-of-the-art access online. "If cost overruns appeared in any other part of Allstate's budget," she wrote, "it seemed likely that the new Internet platform might be the first thing to go. With rising costs in the industry as a whole, that seemed a distinct possibility, even though Allstate maintains it is not seeing a material change in loss costs."

Allstate's existing system, Schroeder says, is "not scalable." And any delays in implementing a new Internet system, she says, would put Allstate at a competitive disadvantage to the likes of Progressive Corp (PGR:NYSE - news - boards) or Berkshire Hathaway's (BRK.A:NYSE - news - boards) GEICO. "We believe the company may be caught between a rock and a hard place, trying to meet earnings expectations during a period of margin pressure while at the same time, building a state-of-the-art direct platform."

A spokeswoman dismisses Schroeder's concerns, saying that is existing system "is scalable," and that Allstate has always said that it would start with its existing system, with the Internet component added "down the road." The company further attempted to finesse the situation in its press release, in which Groot was quoted as saying that "today, we have all the technology we need to implement and support the complete rollout of our aggressive customer-focused multiaccess strategy.''

Reason enough to watch the quality of Allstate's earnings, going forward, to see whether they just make or break the number -- and whether going ahead with the plans and spending the money would've made a difference.

Mark Martinez assisted with the reporting of this column.

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