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Bottomline Technologies: A Net Company with a Bottom Line

Every day, there seems to be a new B2B marketplace deal. Plastics. Autos. Steel. No industry is immune.

But a critical element for B2B is having a strong electronic payment system. If not, a B2B marketplace will quickly disintegrate.

A company that is a leader in electronic payments is Bottomline Technologies . Actually, the company was founded in the late 1980s and, since then, has specialized in B2B payment systems. In fact, the company has been able to sign-up serious channel partners, such as Citigroup, UPS and FleetBoston. They have been a tremendous source for sales growth.

More importantly, Bottomline Technologies knows how to run a viable business. The company has been showing profits for the last three years.

But the company is not resting on its laurels. Recently, it made two key acquisitions. One was for Checkpoint Holdings (for $78 million). The deal extends Bottomline's penetration into international markets. In all, Checkpoint has 3,000 customers in the U.K., such as British Telecom. Basically, Checkpoint has expertise in the U.K.'s Bankers Automated Clearing System, as well as Euro-denominated transactions.

Clearly, the opportunities in Europe are enormous. Much of the business transactions are still largely paper-based. Bottomline will be a first-mover to automate these manual processes.

The other key deal was for Flashpoint (for $12 million). This company is a Web-based software developer. In fact, Flashpoint has been developing some of Bottomline's technologies, such as NetTransact, which allows for B2B electronic bill presentment and payment.

In the past quarter, Bottomline had revenues of $15.4 million, which was a 44% increase from the same period a year ago. Net income was $1 million and the cash balance was $38.5 million.

Although, there could be some volatility in the financials. The company is changing its business model away from licensing and focusing on transactions. Consequently, the stock price has been volatile. The price range is $12-5/8 - $54-7/8. Currently, the stock price is $36-1/4.

With Bottomline's experience and broad technology solutions, though, it is definitely in a great position to benefit from the B2B wave. It will likely become a necessary component of the underlying infrastructure.



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