Calls of Note Part 1

Friedman, Billings, Ramsey out on Online Resources (NASDAQ:ORCC), reiterating Outperform after after stock weakness following CKFR's announcement of its intent to purchase Corillian. Of primary concern for investors is the relationship between ORCC's Princeton eCom division and Corillian. Investors may recall this was an issue when ORCC purchased PeCom last year. Some believed that CORI would stop reselling PeCom's product as ORCC (with PeCom) became more of a competitor than a partner. In firm's discussions with both CEOs, they did not believe there was much to that concern. Now, investors are again concerned that CKFR will "push" its way into PeCom accounts, yet again leaving ORCC in the cold. Again, based on firm's conversations today with both CEOs, they do not believe there are any risks over the next few years. However, without any clear evidence, the negative side of the story is an easy one to believe. Firm does not think much harm will come to ORCC and believe these are the times to increase positions.

Firm says that investors must remember CORI only has a true reseller arrangement with PeCom in just a few banks. That relationship covers approximately 1% of ORCC's revenue. The others have a direct contract with PeCom. Also remember the reason that many banks chose PeCom is because they did not want to go with CKFR. Additionally, most contracts are five years in duration and have termination fees attached to them.

Firm notes CORI will remain agnostic for some time. Based on their conversations, CORI will remain independent after the transaction (for a while). They consider this purchase a good deal for CKFR, as it will help defend its market share in the long term. CORI gives Checkfree a front end to integrate with its payment system. It will also be a good deal for ORCC. As CKFR pursues a full-suite approach, banks will start to realize the value of a complete application rather than piecing it all together; ORCC is already there.

Notablecalls: ORCC has been down on higher than usual volume in the past two days as smart money has been selling. This note from FBR may mark the beginning of covering, creating a nice bounce.