INTUIT SELLS BILL PAYMENT BUSINESS TO CHECKFREE.

Byline: Laurie J. Flynn The New York Times

Intuit Inc., the nation's leading seller of personal finance software, is selling its electronic bill payment processing business to its main competitor in that field, Checkfree Corp., for $227.6 million in stock.

Intuit, which also announced widening financial losses Monday, now intends to focus on its core software businesses while expanding its services over the Internet.

The deal with Checkfree comes as Intuit is under pressure from the banks it works with, which want to expand their options for electronic bill-processing. Banks wishing to provide electronic services to consumers using Intuit's popular Quicken personal finance software have had to operate through Intuit's bill processing subsidiary, Intuit Services Corp.

Lately, consumers and financial institutions have shown a preference for conducting business over the Internet rather than over proprietary networks like Intuit Services.

But while Intuit had come to view bill processing as a costly distraction, Checkfree said that adding Intuit's operations would be a cost-effective way of expanding its own main line of business.

Checkfree, based in Columbus, Ohio, markets its electronic transaction processing services exclusively to banks and other financial institutions. Those customers use Checkfree to provide home banking and bill payment services to consumers. Unlike Intuit's network, Checkfree's operations will work with a variety of personal finance programs.

With the acquisition of the Intuit Services unit, Checkfree gains Intuit's relationships with 39 banks and more than 300,000 electronic bill processing customers, bringing its total number of bank customers to 181 and its consumer base to nearly 1.2 million.

The companies, both of whose stocks surged on the news, said they expected to close the deal by the end of the year, pending regulatory and shareholder approval. Intuit's stock rose $2.125 a share Monday, to $32.25; Checkfree gained $3.1875, to $21.25.

Wall Street analysts applauded Intuit's decision to withdraw from what they said amounted to the back end of the transaction processing business, at a time when more full-fledged electronic commerce may finally be catching on.

In the future, analysts said, Intuit's best on-line opportunities will be in providing a consumer interface to the Internet, rather than getting bogged down in the pipes and plumbing of transaction processing.

And while Intuit remains the leader in its core business - personal financial management software - the company is facing increased competition from Microsoft Corp., maker of a program called Microsoft Money.

Microsoft had agreed to acquire Intuit in October 1994 in a deal worth roughly $2 billion, but abandoned that plan last year under antitrust scrutiny from the justice department.

Scott Cook, founder and chairman of Intuit, which is based in Menlo Park, said that transaction processing had become a distraction.

``It was a sizable investment of dollars but also of management time and resources, in a business that is not central to our core competencies,'' Cook said.

As a result of the deal, which includes the transfer of 12.6 million shares of Checkfree stock, Intuit will acquire a 23 percent stake in Checkfree. Intuit executives said they planned eventually to reduce the company's share to 19.9 percent, in order to operate as a minority shareholder and not have to carry Checkfree's results on Intuit's books.