Three months ago, we took a quick look at e-bill processor CheckFree (NASDAQ:CKFR) and its booming business in online bill-paying. The company is riding a demographic wave as more and more Americans move their banking business online. And with each new convert to the online altar of bill paying, CheckFree cashes in.

We also looked at another curious development: the huge following that CheckFree has developed among trading short-sellers -- fiscal agnostics who remain unconverted by CheckFree's strong numbers. Three months ago, CheckFree had 14% of its float sold short. Yet in the wake of last quarter's results, it appeared for a time that the company was winning over (or at least scaring off) its critics. As of last month, the percentage of shares sold short had dropped to 11%.

Ah, but true unbelievers die hard. Judging from the early reaction to CheckFree's fiscal third-quarter 2005 earnings report, released yesterday, short sellers returned to sell off the stock by 6% this morning. Let's take a look at why that's so.

As far as CheckFree's earnings report went, it was pretty as a paycheck. Compared to fiscal Q3 2004, revenues grew a healthy 23%, and earnings more than doubled to $0.17 per diluted share. What's more, earnings also grew more than 20% sequentially from fiscal Q2 2005. On the cash-flow front, CheckFree has already generated $136 million in free cash flow over the first three quarters of this fiscal year. If the company merely maintains its current level of cash profitability -- if it doesn't grow at all over the three months remaining in fiscal 2005 -- it should easily hit its targeted level of $180 million in annual free cash flow.

So what's not to like?

Apparently, it's this: Short sellers and short-term thinking go hand in hand. And short sellers chose to ignore both CheckFree's astounding results and its generally upbeat forecasts for the rest of fiscal 2005. Instead, they focused on one bit of arguably bad news. The company advised that the expected shift of Wachovia's (NYSE:WB) online bill-payment service to CheckFree's bill-paying platform will be delayed by a couple of quarters. Granted, it's still planned to take place in fiscal 2006, and CheckFree insists the delay will not affect its fiscal 2006 profits. But six months is a long time in the land of day trading, and the population there lacks an appetite for pie in the sky.

Foolish investors with a longer-term focus, on the other hand, should perhaps take this chance to eat their fill of discounted CheckFree shares. While they're not exactly cheap, they're at least cheaper than they were yesterday.

For further Foolish musing on CheckFree, read:

Fool contributor Rich Smith has no position in any of the companies mentioned in this article.