A day after a sell rating sent shares of



down almost 8%, the company reported better-than-expected earnings for its fiscal first quarter.

Using generally accepted accounting principles, CheckFree reported a loss of $16.2 million, or 18 cents a share, compared with a loss of $88.9 million, or $1.02 a share, in the year-ago period.

The electronic-commerce services provider posted pro forma earnings $14.1 million, or 16 cents a share, versus a loss of $1.9 million, or 2 cents a share, in the year-ago period. On that basis, the company beat analysts' expectations of 12 cents a share, according to Thomson Financial/First Call.

Pro forma earnings exclude a change in accounting for goodwill, acquisition-related amortization, a noncash adjustment to revenue for the vesting of warrants, as well as certain tax benefits.

Revenue was up 11% to $116.7 million from a year ago, on a pro forma basis. The results exclude noncash revenue of $0.6 million related to warrants. GAAP revenue was $130.2 million in the quarter.

"While our top line was helped by timing-related factors that led to the retention of some revenue and transactions from a consumer that we had forecast to decline, we are encouraged by the steady market acceptance of viewing and paying bills online," said CheckFree's chief executive, Peter Knight, in a statement.

On Monday, Deutsche Bank downgraded CheckFree to sell from hold, saying that its annual report has failed to answer various questions and that it is overvalued relative to its peers.

"CheckFree's 10-K provides more disclosure than any previous filing. While we are pleased by the additional transparency, the report raised a number of questions that the company's management has declined to address," said Richard Zandi, an analyst at Deutsche Bank, in a research note.

He said questions center on how many top10 banks CheckFree provides outsourcing services to, the churn rate for its online bill payers and its maintenance renewal rate. He also questioned why the allowance for doubtful accounts as a percent of total accounts receivables fell by 100 basis points in 2002.

Other questions center on CheckFree's "unconditional purchase obligations," which were disclosed for the first time in its most recent annual report, Zandi said. The analyst also said he wants to know why the company reduced its reserve for returns and chargebacks by nearly $3 million in 2002.

CheckFree currently trades at 27 times his 12-month forward estimate. According to Zandi, it should trade at a slight discount to its peer group multiple of 17.4. He has a $9.50 price target on the stock.

A spokeswoman for CheckFree declined to comment on the Deutsche Bank report on Monday.

In after-hours trading, shares of CheckFree were up 99 cents, or 7%, at $15.50.