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Technology Stocks : CheckFree (CKFR)

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To: Charlie Smith who wrote (1276)	1/22/1998 11:15:00 AM
From: Brooks Jackson	Read Replies (2) of 8545

<They can afford to undercut CKFR severely on price FOREVER if they decide to.> Charlie, I agree that's a concern, but... --It would require MSFT to lose money on the deal, possibly opening them to more antitrust charges. (This would be classic "predatory pricing.") --MSFT would have to convince First Data to lose a lot of money too, as MSFDC is a joint venture. I'm not sure First Data can afford it. --Banks ought to be, and I think probably are, as much worried about QUALITY as price. How much is it worth to the banks not to have customers pissed off when the bank's e-pay contractor fails to mail a check on time, or pays the wrong merchant? --It will be impossible to undercut the price on CKFR's product until MSFDC has a product of its own to sell. Which so far they don't. --CKFR has a natural pricing advantage because their costs per transaction will be very low compared to any startup venture. As I recall, about 50% of CKFR's payments are already fully electronic, and therefore much cheaper than paper checks. It will take any competitor a long time to match that ratio and enjoy CKFR's economies of scale. Anyway, that's my thinking. Sure hope I'm right. Rebuttals invited.

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