Does anyone who is smarter then me about this stuff think this could be related, even thought it does not SAY Y2K? Thanks

THE PROBLEM STEMS from CheckFrees changeover to a new transaction-processing system called Genesis, according to Terrie OHanlon, senior vice president of corporate communications. OHanlon said CheckFree began slowly switching its 350 member banks to the system six months ago, and the company has no idea why trouble started this weekend. All 20 banks on the new system are experiencing problems. U.S. Bancorp and Wells Fargo are among those impacted, but CheckFree did not immediately disclose the complete list of affected banks. Were working as diligently as possible to isolate the root cause of the problem, OHanlon said. This is disappointing, obviously, but were confident well identify the root cause and solve it. Consumers use personal financial software such as Money or Quicken to pay bills online through their personal bank. Banks outsource the payment services to CheckFree  a process that is normally transparent to the consumer. (Microsoft, the maker of Money, is a partner in MSNBC.) But when many Quicken and Money users tried paying bills this week, their computers returned an error message halfway through the process  leaving customers wondering whether the transactions went through. As the end of the month approaches, when many consumers pay their bills, CheckFree says it does not know when its service might return to normal. Complicating the troubleshooting  the problems are intermittent, OHanlon said. This is not an outage, which would probably be easier to identify. Consumers who receive an error message should just keep trying, she said. She did not know how many consumers transactions had failed, or what percentage of transactions were being blocked by the glitch. But many the problem appears widespread at Intuit. A Quicken customer support representative told MSNBC, As far as I know, its affecting about every Quicken customer trying to do some kind of online banking. Repeated attempts by MSNBC to perform transactions using a U.S. Bancorp account failed during the past 24 hours. The timing of the computer glitch is unfortunate. Just Tuesday, MSNBC reported that Internet giant Yahoo! Inc. is interested in acquiring the electronic commerce service supplier. Yahoo! CEO Tim Koogle hinted at the possible acquisition at the Hambrecht and Quist technology conference in San Francisco on Monday evening.

-- (wondering@paranoid.com), April 29, 1999

Answers

Many companies are experiencing problems with transaction processing on the web. Chalk it up to growing pains, or bleeding heavily on the bleeding edge. Call Schwab or ETrade and ask them about it. To have transactions fail on one attempt, but be accepted on another, doesn't sound like a Y2K issue on the back-end. That would be more likely to cause consistent failures, and less head-scratching by the technical staff. Probably a bug or config problem with the front-end stuff.

-- Polly (skippy@innermongolia.com), April 29, 1999.

Hmmm...

CheckFree Reports Record Earnings and Revenues for the Third Quarter of Fiscal 1999 Company delivers a 20% increase in revenues over the third quarter of Fiscal 1998, and Earnings Per Share of four cents; Consumers can now receive 21 bills electronically at more than 20 distribution points

ATLANTA (April 27, 1999) -- CheckFree Holdings Corporation (NASDAQ: CKFR) today announced revenues of $62.9 million for the third quarter of fiscal 1999 ended March 31, 1999. Total revenues for the quarter increased 20 percent over the comparative quarter of last year, adjusted for the effects of software divestitures completed last year.

Excluding the effects of a $2.2 million charge for in-process research and development at Mvbius Group, acquired in March, and a one-time real estate transaction in the Investment Services division, the Company reported a profit for the quarter of just over $2 million, or four cents per diluted share, compared to an effective break-even result for the same period last year...

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Some thoughts:

Their FY2000 begins July 1. If "Genesis" is their Y2K-compliant replacement system, they may be somewhat under the gun to get those banks switched over.

OHanlon said CheckFree began slowly switching its 350 member banks to the system six months ago, and the company has no idea why trouble started this weekend. All 20 banks on the new system are experiencing problems.

So, they've switched over 20 banks in the past 6 months; probably piloted one or two, then moved 6 more or so, let them settle in, then moved the rest of the 20 just recently. That leaves 330 to go. Unless they have one hellacious cut-over planned between now and end of June, it seems rather unlikely that they're on a July 1 deadline, but who knows? I've seen management come up with much stranger schedules. Even if they have until end of calendar year, that's still moving about 40 banks per month. With the current problems, they'll have to halt further deployment until they're fixed, which will create even more of a crunch...

Where's Deano? He's got beaucoup contacts in the financial services world. Hey, Deano, make some calls, willya?

-- Mac (sneak@lurk.hid), April 29, 1999.

[snoop] [snoop] Ah-ha!

Checkfree's Response to Inquiries Regarding Intermittent System Disruptions

...Genesis is the electronic billing and payment technology platform that CheckFree began developing 18 months ago to replace its three legacy processing systems. The Company began migrating banks and their consumers to Genesis last Fall.

Replacing legacy systems...

-- Mac (sneak@lurk.hid), April 29, 1999.

!@#$% link was wrong. Here 'tis: Checkfree Media Relations

You'll have to scroll down to the "Industry Information" links and click on their Response to Inquiries Regarding Intermittent Systems Disruptions

-- Mac (sneak@lurk.hid), April 29, 1999.

Well, was finally able to process online last night (Friday). Looks like Checkfree's fix (mentioned on their Website) took care of the problem. I'm thinking that Wells Fargo's upgrade was for Checkfree's new Genesis package, which meant that WF got bit by the failure that affected all the member banks using Genesis starting last Sunday. Surprising that there wasn't a quicker backout, but maybe the programmers kept saying that they were "really close" to fixing it and that kept management from directing a rollback.

Let's see if this affects Yahoo's interest in acquiring Checkfree.

-- Mac (sneak@lurk.hid), May 02, 1999.

If it is a Y2K problem, it is very unlikely that they would admit it. Legislation is now becoming more clearly defined about who will be held responsible for negligence to remedy Y2K related failures, as well as the extent of liability to customers that suffer losses. Of course it would be suicidal for any company to say that they knew it was a Y2K related error, yet failed to correct it. As things are starting to get down to the wire, they would probably be better off to say that a meteor from Mars crashed into their computer system! But customers really don't care what the hell causes it, they want to be compensated for any inconvenience. As these types of incidents become larger and more frequent, the lawsuits will begin to overload the court system. Remember the brief E Trade glitch a couple months ago? No big deal, right? WRONG!!!

The after-effects of the E Trade glitch

Not for the money-hungry vultures and lawyers out there who want to sue anything that moves.

-- @ (@@@.@), May 02, 1999.

Mac,

"Excluding the effects of a $2.2 million charge for in-process research and development at Mvbius Group, acquired in March, and a one-time real estate transaction in the Investment Services division, the Company reported a profit for the quarter of just over $2 million"

Amazing! They lost money and they are reporting record earnings. Any details on just exactly what this "in-process research and development" is all about? (Y2K costs in disguise?) It's amazing what accountants can do these days!

Their exact relationship with Intuit, the makers of Quicken software, isn't clear to me, but I have to wonder why they would even be using Quicken when it was widely known there were Y2K problems with it. In fact, 6 class action suits have already been filed against Intuit:

lawsuits

Product: accounting/financial software

Stein v. Intuit, Inc., New York Date Filed: June 25, 1998 Colbourn v. Intuit, Inc., California Date Filed: June 4, 1998 Rubin v. Intuit, Inc., California Date Filed: May 27, 1998 Faegenburg v. Intuit, Inc., New York Date Filed: May 26, 1998 Rocco Chilelli v. Intuit Inc., New York Date Filed: May 13, 1998 Issokson v. Intuit, Inc., California Date Filed: April 28, 1998

This sounds to me like it is shaping up to be a CLASSIC example of one of the primary types of lawsuits that we are going to see a lot of. Not only will they now have to deal with inconveniences to customers, but there also seems to be some dispute between Intuit and CheckFree as to whose fault it is.

See under Media Relations category:

"CheckFree Public Statement Regarding Release Issued by Intuit Corporation on March 3, 1999, Announcing Intent to File a Complaint Against CheckFree (8:00 a.m. EST)"

Why? Just what we were afraid of - inability for two companies to make sure that software works not only WITHIN each company, but also BETWEEN them! Wow, what a mess - we're going to see an awful lot more of this.

-- @ (@@@.@), May 02, 1999.

In case you're interested: The CheckFree 10-Q Statement

YEAR 2000 READINESS

The following statements are "Year 2000 Readiness Disclosures" in Conformance with the Year 2000 Information and readiness Disclosure Act (15 U.S.C. 1 note) enacted on October 19, 1998.

The goal of the Company is to ensure that all systems and products will be ready for any date-based processing related to the millennium. The following readiness disclosure is presented for each of the Company's business segments; Electronic Commerce, Software and Investment Services.

State of Readiness. The Company is moving all of its Electronic Commerce Division processing to Year 2000-ready environments and is making satisfactory progress to ensure that all of its systems will be ready for any date-based functions related to the millennium. An inventory of all information technology and non-information technology systems is maintained and periodically updated. Those functions that are likely to have a material effect on Company business have been identified and assessed. Validation is based on third party representations and/or internal testing. Based on a review of third-party representations, the Company is not currently aware of any third-party issue applicable to the Year 2000 that is likely to have a material impact on the conduct of business, the results of operations or the financial condition of the Company. The Company has not performed its own tests on many of these third-party systems and no assurance can be given at this time that these systems are Year 2000 ready.

Previous implementation phases included building a Year 2000-ready data center and the physical move of the processing systems to that center. The final implementation phase will include the planned migration of customers from the Chicago and Columbus systems to the Year 2000-ready environment followed by applicable testing on that system to be completed by the middle of 1999. In anticipation of limited customer migration from the Austin system to Genesis before January 1, 2000, the Austin system has been made Year 2000 ready and testing with financial institutions is substantially complete. Any of the existing systems or facilities that will be retained were made Year 2000-ready by the end of calendar 1998. During the first half of calendar 1999, the Company will address any remaining Year 2000 functions that are not considered mission critical and will support the certification efforts of its financial institution partners.

Costs to Address the Company's Year 2000 Issues. Although the development of Genesis has taken into account relevant Year 2000 issues, the planned conversion was not accelerated due to Year 2000 issues and Year 2000 costs are not included in development for the Norcross system. The following chart reflects the Company's Year 2000 specific costs. The fiscal year 1998 costs were attributed to remediation of legacy systems and applications. The cost to complete includes remediation, testing and verification, but is primarily budgeted to remedy any Year 2000 related situations that management has not heretofore anticipated. The Company believes that associated costs are adequately budgeted for in its fiscal 1999 business plans.

(In Thousands) ====================================================================== ==========

YEAR TO COST TO DATE FISCAL FISCAL FISCAL BUSINESS SEGMENT COMPLETE 1999 1998 1997 TOTAL - -------------------- ------------ ------------ ------------ ------------ ------------ Electronic Commerce $ 849 $ 551 $ 100 $ -- $ 1,500 Software 200 400 500 -- 1,000 Investment Services 154 653 375 -- 1,182 Corporate 212 98 -- -- 310 ------------ ------------ ------------ ------------ ------------ Total $ 1,415 $ 1,702 $ 975 $ -- $ 4,092 ============ ============ ============ ============ ============

Risks of the Company's Year 2000 Issues. In order to accurately process transactions, the Company must rely on technology supported by its customers and suppliers. Transaction processing relies on transmissions of data from consumer personal computers, through financial institution and merchant web servers and the internet, over third party data and voice communication lines, and through the Federal Funds System. Failure by the Company, its customers or suppliers to adequately address the Year 2000 issues in a timely manner could impede the Company's ability to process transactions and can have a direct impact on its ability to generate revenue per agreements with financial institution, portfolio management, merchant and direct customers. This in turn could have a material impact on the conduct of the business, the results of operations and the financial condition of the Company. Accordingly, the Company plans to address all Year 2000 issues before problems materialize. However, should efforts on the part of the Company, its customers and suppliers fail to adequately address their relevant Year 2000 issues, the most likely worst case scenario would be a total loss of revenue to the Company.

The Company's Contingency Plans. The Company is internally reviewing and testing all mission critical systems and major system components for Year 2000 readiness. Additionally, Year 2000 considerations have been and will continue to be incorporated into the Company's business contingency plans.

The Company cannot guarantee that its efforts will prevent all consequences and there may be undetermined future costs due to business disruption that may be caused by customers, suppliers or unforeseen circumstances.

(Notice the $1.7 million Y2K expenses thus far in 1999. Could be conveniently excluded from a charge to earnings as "in-process research" on an acquisition)

-- @ (@@@.@), May 02, 1999.